Zacks Investment Research downgraded shares of American Public Education, Inc. (APEI) from OUTPERFORM to NEUTRAL on April 30, 2013, with a target price of $35.00.
We are returning back to a Neutral rating on American Public's following weak new student starts in the fourth quarter of 2012. New student enrollments declined 8% in the quarter, much higher than management's expectations of a decline between 3% and 7%. Management believes that the company's fraud prevention initiatives are reducing enrollment of students who abuse funds, which explains the decline in new student starts for the quarter. Moreover, the company also provided a bleak outlook for the student starts for the upcoming quarter. Operating margins also declined in the quarter due to increased marketing costs. A tough regulatory environment also remains a persistent overhang. All these factors overshadow the fourth's quarter's better than expected earnings results and positive growth in revenues and enrollments.
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