For-profit education provider Apollo Group Inc (APOL.O) said its unit, University of Phoenix, has been recertified for participation in federal student financial aid programs under Title IV of the Higher Education Act for three years.
The company’s shares, which have fallen 26 percent following news last month of an informal regulatory inquiry over its revenue recognition practices, rose as much as 9 percent Monday morning on Nasdaq.
The University of Phoenix, whose certification for the Title IV programs expired in June 2007, had been participating in the programs on a month-to-month basis pending recertification.
The University of Phoenix applied for recertification in March 2007, and in February this year, the DoE performed a review of its policies and procedures involving Title IV programs.
In a statement, Apollo said it was informed by the U.S. Department of Education that the new participation agreement expires Dec. 31, 2012.
The majority of Apollo’s fiscal 2009 consolidated net revenue came from Title IV financial aid program funds, the company noted in its annual report filed with the U.S. Securities and Exchange Commission on Oct. 27.
Robert W. Baird analyst Amy Junker said the news removes an overhang on the company’s shares, but the SEC informal inquiry will continue to weigh on the stock.
She cut her price target on shares of Apollo, one of the largest, publicly traded for-profit institutions, to $60 from $77.
Shares of education companies have been rattled by regulatory concerns over the last few months as investors fear more scrutiny into the sector under the administration of U.S. President Barack Obama.
Shares of Apollo touched a high of $58.49 before paring some gains to trade up $4.37 at $58.23. (Reporting by A.Ananthalakshmi in Bangalore; Editing by Anne Pallivathuckal)