RBC Boosts DeVry Rating, Earnings Estimates

NEW YORK (AP) — RBC Capital Markets upgraded DeVry Inc. on Thursday, saying the for-profit education provider's string of acquisitions over the past five years have helped diversify its college programs and should buffer it from economic trends.

Meanwhile, efficiency improvements — such as consolidating campuses — could increase profitability and power earnings growth in 2010, said analyst Robert Wetenhall in a note to investors Thursday.

Wetenhall boosted his rating on DeVry to "outperform" from "sector perform" and raised his price on the stock to $62 from $53. He also hiked his earnings estimate for the 2010 fiscal year ending next June to $3.08 from $2.90 a share.

That tops expectations of analysts polled by Thomson Reuters, who expect per-share profit of $3.01.

DeVry shares gained $1.90, or 3.5 percent, to $56.30 in afternoon trading.

So-called proprietary schools have seen enrollments surge with the recession as the out-of-work and underemployed seek to buff up their resumes.

However, DeVry's enrollment trends are now less dependent on the direction of the economy, Wetenhall said. He thinks enrollments on its healthcare campuses, for example, shouldn't decrease even if unemployment wanes.

Wetenhall also noted that small increases in efficiency on campuses in its business, technology and management unit, DeVry's largest, could power earnings growth. That unit's operating margin of 12.8 percent is the lowest of DeVry's U.S. units.