Zacks Investment Research upgraded shares of American Public Education Inc (APEI) from UNDERPERFORM to NEUTRAL on June 20, 2014, with a target price of $36.00.
We are upgrading American Public to Neutral from Underperform owing to its better-than-expected performance in the first quarter of 2014. Apart from surpassing the Zacks Consensus Estimate by 25.5%, first-quarter earnings exceeded management's expectation, given lower marketing expenses, cost savings and efficiencies. Revenue also exceeded the company's expectations and the Zacks Consensus Estimate driven by sales from Hondros. However, earnings declined year over year due to military enrollment hurdles and higher costs. Enrollment trends in the quarter were adversely impacted by a decline in the number of students using TA benefits following recent administrative changes by the military. Margins also remained weak as costs increased in the quarter. Moreover, management expects military enrollment hurdles to continue in the second quarter of 2014 and therefore issued a disappointing outlook for the quarter.
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