Deutsche Bank Upgrades DeVry Education To Buy, Increases PT To $55


In a research report released today, Deutsche Bank analyst Paul Ginocchio upgraded shares of DeVry Education Group (NYSE:DV) from a Hold to a Buy rating and increased his price target from $47 to $55, which represents a 28% upside from where stock is currently trading.

Ginocchio wrote, “Strong healthcare segment growth and a commitment to maintain Business, Tech & Mgmt (BTM) segment profitability suggest multi-year double-digit EBITDA growth. We think that is attractive for 6.8x EBITDA and 13.7x PE. We also see more upside than downside to consensus expectations for FY15E. We tweak down our FY’15E EPS estimate by 3% to $3.05, still 9% above consensus at $2.79, and FY16E by 5% to $3.53, 11% above cons. at $3.19. We raise our rating from Hold to Buy and our price target from $47 to $55, which still assumes no turnaround at BMT. For those uneasy about being long Ed stocks, we advise APOL as a hedge.”

The analyst continued, “DeVry Univ (DVU) is seeing double-digit declines in starts in Sept. despite increased scholarships. Any improvement (“less bad”) in DVU is not near term, which is why we like APOL as a hedge. That said, we think the market is putting zero or negative value on BTM (which is DVU + Keller grad) within the overall DV share price. If DVU does turnaround, we estimate it could add $10+ more to our price target. Potential losses in BTM remain the key risk, but we take comfort in mgmt’s vocal divisional goal of not losing money.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Paul Ginocchio has a total average return of 4.2% and a 39.1% success rate. Ginocchio is ranked #1034 out of 3329 analysts.

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