NEW YORK (TheStreet) -- A revenue miss from Apollo Education Group (APOL) has investors questioning the worth of the company's online college degrees and for-profit education business model, despite a flurry of analysts upgrades Wednesday morning.
Shares fell more than 7% Wednesday to $32.59 after the company behind the University of Phoenix, Carnegie Learning and other online institutions reported second quarter sales that fell short of analysts' expectations. Apollo reported $0.28 EPS, excluding special items, on $679.1 million in sales. Analysts had expected $0.19 EPS on about ten million more in revenues, according to stats at the Analyst Ratings Network.
Apollo's EPS excluded the impact of restructuring costs, acquisition costs, legal expenses and a beneficial tax settlement. Including those items EPS fell to $0.13.
Apollo reaffirmed guidance. The company expects sales for the year to fall between $3 billion and $3.1 billion. It anticipates operating income, excluding special items, to come in between $400 million and $450 million.
Analysts upgraded the stock this morning following yesterday's earnings. Analysts at Stifel Nicolaus have a buy on the stock and boosted their price target Wednesday by $3 to $38, according to the Analyst Ratings Network. Wells Fargo analysts upgraded the stock to outperform and raised their price target $3 to $39.
Yesterday, analysts at BMO Capital Markets boosted their price target $5 to $40. Analysts saw positive news in new student starts and cost management.
But cashtaggers complained that course enrollment had tumbled. Enrollment at the University of Phoenix Degree program dropped 16.8% from the same period a year ago. New degreed enrollment fell 16.5% from the prior year.
@NYCStox worked in it right after college in 2010, was dying then, friends who work there say its much worse, 10% grad rate, 50% default- Snorticus (@Snorticus) Apr. 1 at 07:46 PM
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.