Zacks Investment Research downgraded shares of American Public Education Inc (APEI) from NEUTRAL to UNDERPERFORM on April 10, 2014, with a target price of $31.00.
We downgrade American Public to underperform due to disappointing fourth-quarter 2013 results and a bleak outlook for the upcoming quarter. Apart from missing the Zacks Consensus Estimate by 5.6%, fourth-quarter 2013 earnings declined 31.1% year over year due to military enrollment hurdles and higher costs. Revenue declined 4% due to greater- than-expected decline in enrollments. Enrollments in the quarter were adversely impacted by a decline in the number of students using TA benefits. The temporary suspension of the TA due to the government shutdown in Oct 2013 and lowering of the benefits by the military hurt enrollments by military students. Margins also remained weak as costs increased in the quarter. Moreover, management expects the military enrollment hurdles to continue in the first quarter of 2014 and therefore issued a disappointing outlook for the quarter.
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