Zacks Investment Research downgraded shares of Capella Education Company (CPLA) from OUTPERFORM to NEUTRAL on November 29, 2013, with a target price of $69.00.
Capella's third-quarter 2013 earnings of $0.48 per share surpassed the Zacks Consensus Estimate by 20% and year-ago earnings by 23.1% as better-than-expected top-line growth and operating margins made up for decline in enrollment. Revenues breezed past both the Zacks Consensus Estimate and year-ago figures backed by tuition increase during the quarter. Top-line also exceeded management's expectation on the back of better-than-expected student starts. We believe that Capella's relationship and brand-driven marketing strategy and initiatives to improve learner success rates have begun to bear fruitful results. However, management's cautious guidance for the fourth quarter due to volatility in the educational sector have forced us to revert to a Neutral recommendation on the stock.
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