Monday, Credit Suisse downgraded Capella Education Co. (CPLA) shares to Neutral from Outperform with a price target of $61.
Analyst Flynn said that his thesis on Capella's business prospects and "high quality" differentiation remain unchanged. The analyst is downgrading because, having risen 23.7% and outperformed the equal weighted sector index by ~ 1900 bps in the last 3 months, shares are approaching his price target of $61.
Given the analyst's concerns about the sector's legal/regulatory environment, he thinks it is prudent to change his rating rather than his price target. The analyst continues to believe Capella is one of the highest quality companies in the education space and is differentiated by its: strong student value proposition; low cohort default rate (2007 2.5% vs 07 ~9% public company average); strong management team.
The analyst models a ~25% 3-5 year EPS CAGR and expects solid second quarter results may slightly exceed $0.50 EPS consensus. The analyst believes that evidence is mounting that a more challenging legal/regulatory environment and the potential that the government will fund more public sector competition could hold back longer-term growth expectations and near-term sector valuation multiples.
Although Capella's high quality offering and low default rate leave it less exposed to these risks, the analyst does expect these risks to hinder Capella's valuation multiple potential somewhat.
Currently, CPLA is up $0.65 or 1.11% and trading at $59.40.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.