Monday, August 16, 2010

Education stocks fall on buzz ahead of GAO report

Tue, Aug 3 2010
By Fareha Khan

BANGALORE (Reuters) - Shares of U.S. education companies fell Tuesday on reports that the United States Government Accountability Office said some for-profit colleges encouraged fraudulent practices with regard to student recruitment.

BMO Capital Markets analyst Jeffrey Silber, who has seen the not-yet-public report, wrote in a note to clients that the GAO investigation found 15 for-profit schools making deceptive statements, like providing misleading information about program duration, costs and potential salaries.

The GAO report is expected to be publicly available later Tuesday.

Sterne, Agee & Leach analyst Arvind Bhatia said the report will have an impact on these companies' bottom-line, at least in the next 6 months to 12 months.

"This puts pressure on Congress to actually do something, and also increases the risk of litigation for the for-profit companies," Bhatia said.

The S&P 1500 education services sub industry index was down 3 percent in afternoon trade, with bellwether Apollo Group (APOL.O: Quote, Profile, Research, Stock Buzz), down 4 percent at $45.30 on Nasdaq.

Shares of Corinthian Colleges Inc (COCO.O: Quote, Profile, Research, Stock Buzz) were trading down 4 percent at $8.89, Career Education Corp (CECO.O: Quote, Profile, Research, Stock Buzz) down 4 percent at $23.88, both on Nasdaq, and DeVry Inc's (DV.N: Quote, Profile, Research, Stock Buzz) shares were trading down 3 percent at $52.96 on the New York Stock Exchange.

(Reporting by Fareha Khan and Bijoy Koyitty in Bangalore; Editing by Anthony Kurian)

© Thomson Reuters 2010. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the

Thomson Reuters group of companies around the world.

Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to colleagues, clients or customers, use the Reprints tool at the top of any article or visit:

This is a Re-Post from Reuters for educational purposes to my bloggers.

No comments:

Post a Comment