One For-Profit Education Upgrade; More To Come?

Major research firm RBC upgrades Corinthian College (NASDAQ: COCO) to Outperform. That is the news, announced today. What really interests traders and investors, of course, is whether there are more upgrades to follow.

For-profit educational institutions have taken a huge hit recently, as Benzinga’s readers are well aware. Regulatory uncertainty lingers for these institutions, causing both confidence and stock price to fall. Experts predict stricter regulation within the sector, particularly regarding debt and loan repayment.

As traditional universities have increased tuition enormously in the last decade, it was the prime environment for for-profit institutions to emerge, with their ability to offer significantly lower tuition rates. However, on average, the stock price for companies within this sector has fallen 20% in 2010.

Is this the end of for-profit educational institutions? Probably not, although it may be the end for some.

Will the upgrade of Corinthian College bolster confidence in the sector? With this news, some traders may expect upgrades of other for-profit institutions. If this happens, the entire sector may be lifted on increased optimism. This would make current price dips attractive entry points on the market overreaction. Regardless of the outcome, it will be interesting to see how the for-profit education sector performs in the coming weeks and months, especially if regulation is enacted for these institutions.


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