Zacks Investment Research upgraded shares of Capella Education Company (CPLA) from NEUTRAL to OUTPERFORM on September 03, 2013, with a target price of $65.00.
Capella's second quarter 2013 earnings of $0.83 per share surpassed the Zacks Consensus Estimate on the back of better than expected top line growth. Though declining year over year, revenues exceeded the Zacks Consensus Estimate. Moreover, the top-line decline was much narrower than management's expectation on the back of better-than-expected enrollment growth. New enrollments grew 12.7%, far exceeding management's expectation of sequentially flat results. We believe that Capella's relationship and brand-driven marketing strategy and initiatives to improve learner success rates have begun to bear fruitful results. Margins also exceeded management expectations in the quarter driven by top line growth and cost savings. Further, continuous innovation and efforts to update courses are boosting enrollments. We therefore upgrade our recommendation on the stock to Outperform with a target price of $65.00.
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