24/7 Wall St. » CECO

Capella Leads For-Profit Colleges’ Downturn (CPLA, APOL, DV, CECO, COCO, STRA, WPO)

Paul Ausick — Tue, 24 Apr 2012 16:02:32 +0000

The crackdown on financial aid to students at for-profit colleges has taken a toll on the revenues of these institutions over the past couple of years. But the restrictions on the way these schools recruit and admit new students may be the biggest problem the colleges face. Today’s earnings from Capella Education Co. (NASDAQ: CPLA) highlight the problem.

A quick check of seven of these for-profit schools shows that over the past five years only one is showing a profit: DeVry Inc. (NYSE: DV) is up 6.6% since April of 2007. For the same period, Apollo Group Inc. (NASDAQ: APOL) is down -29%, Career Education Corp. (NASDAQ: CECO) is down -77%, Corinthian Colleges Inc. (NASDAQ: COCO) is down -74%, Strayer Education Inc. (NASDAQ: STRA) is down -33%, and the Washington Post Co. (NYSE: WPO), owner of the Kaplan franchise, is down -50%.

Capella reported this morning that first quarter EPS came in at $0.82 on revenue of $109.4 million. The consensus estimates called for EPS of $0.78 on revenue of $110 million. In the same period last year Capella posted EPS of $0.90 on revenue of $111.35 million.

What hurt the company today is its enrollment forecast. Capella’s new student enrollments have fallen for six straight quarters, including a loss of -5% in the first quarter of 2012. The company’s CFO said in a conference call that Capella is “less optimistic” about enrollment growth throughout 2012, and that the company expects to see enrollment declines in “the high single-digit” range for the current quarter.

Contributing to the enrollment troubles at Capella and the others is recent legislation introduced into the US House of Representatives that would severely curtail the use of any federal money by the schools to advertise and market to potential students. The legislation would also apply to non-profit schools, but the impact would be greatest on the for-profits.

The legislation faces stiff opposition in both the House and the Senate and may well be defeated. That is not likely to not constrain future efforts to rein in the flow of federal dollars to for-profit schools.

Capella’s shares are down -9.6% at about noon today, at $31.12 in a 52-week range of $26.12-$54.86.

Paul Ausick

Filed under: Earnings Tagged: APOL, CECO, COCO, CPLA, DV, STRA, WPO

24/7 Wall St. Closing Bell (AAPL, NEM, DNDN, CHTR, APOL, COST, PCLN, HFC, AZO, CRZO, DPZ, ODP, SAFM, RDC, TECD, YRCW, ALIM, TBET, SUMR, PEIX, CECO)

Paul Ausick — Tue, 28 Feb 2012 21:14:49 +0000

Stocks started the day nearly flat before turning down on a poor report on US durable goods orders (more coverage here) and a slide in the Case-Shiller home price index (more coverage here). The Conference Board’s consumer confidence index came in much stronger than expected, however, and all the indexes had turned positive by mid-morning (more coverage here). The tech sector, led by Apple Inc. (NASDAQ: AAPL), which posted a new 52-week high over $543/share, carried the rest of the market higher. Crude oil was lower today, with WTI crude lower by -1.9% at $106.55/barrel and Brent crude down -1.92% at $121.79/barrel. Gold settled up 0.8% at $1,788.40/ounce, the yellow metal’s highest close since more than three months.

The unofficial closing bells put the DJIA up nearly 24 points to 13,005.12 (0.18%), the NASDAQ rose more than 20 points (0.69%) to 2,986.76, and the S&P 500 rose 0.34% or nearly 5 points to 1,372.18.

There were several analyst upgrades and downgrades today, including Newmont Mining Corp. (NYSE: NEM) cut to ‘hold’ at TD; Dendreon Corp. (NASDAQ: DNDN) maintained as ‘neutral’ but target price cut to $13 at Credit Suisse; Charter Communications (NASDAQ: CHTR) maintained as ‘outperform’ and target price raised from $60 to $74 at Credit Suisse; Apollo Group Inc. (NASDAQ: APOL) raised to ‘overweight’ at Barclays; and Costco Wholesale Corp. (NASDAQ: COST) started as ‘perform’ at Oppenheimer.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Priceline.com Inc. (NASDAQ: PCLN) is up nearly 7% at $632.78 after posting a new 52-week high of $637.88 earlier today (more coverage here); HollyFrontier Corp. (NYSE: HFC) is down -3.7% at $31.91 (more coverage here); Autozone Inc. (NYSE: AZO) is up 2.7% at $375.94 after posting a new 52-week high of $377.78; Carrizo Oil & Gas Inc. (NASDAQ: CRZO) is down -0.5% at $27.47; Domino’s Pizza Inc. (NYSE: DPZ) is up nearly 16% at $38.88 after posting a new 52-week high of $38.90 earlier today (more coverage here); Office Depot Inc. (NYSE: ODP) is up nearly 19% at $3.58; Sanderson Farms Inc. (NASDAQ: SAFM) is down -1.5% at $48.72; Rowan Companies Inc. (NYSE: RDC) is down -6% at $36.20; TechData Corp. (NASDAQ: TECD) is down -6.7% at $53.62; and YRC Worldwide Inc. (NASDAQ: YRCW) is down -13% at $10.31.

Other standouts from today include the following stocks:

Alimera Sciences Inc. (NASDAQ: ALIM) is up about 76% at $4.06. The eyecare drug maker received a positive outcome from a European regulatory body for its ILUVIEN treatment.

Tibet Pharmaceuticals Inc. (NASDAQ: TBET) is up 14% at $1.71. The drug maker is being taken private by its CEO and chairman for $3/share.

Summer Infant Inc. (NASDAQ: SUMR) is up nearly 25% at $5.98. The maker of branded juvenile products announced better than expected earnings this morning.

Pacific Ethanol Inc. (NASDAQ: PEIX) is down more than -26% at $1.19. The ethanol maker’s reported earnings fell short of expectations. More coverage here.

Career Education Corp. (NASDAQ: CECO) is down more than -18% at $9.17. The for-profit education company posted a weak earnings report this morning.

Stay tuned for Wednesday. Federal Reserve chairman Ben Bernanke, Dallas Fed president Richard Fisher, and Philadelphia Fed president Charles Plosser are giving speeches. We have noted the following events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
8:30 a.m. – US GDP
9:45 a.m. – Chicago PMI
10:30 a.m. – EIA weekly petroleum status report
2:00 p.m. – Federal Reserve Beige Book
3:00 p.m. – Farm prices

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: AAPL, ALIM, APOL, AZO, CECO, CHTR, COST, CRZO, DNDN, DPZ, HFC, NEM, ODP, PCLN, PEIX, RDC, SAFM, SUMR, TBET, TECD, YRCW

Mid-day Movers (ALIM, TBET, ODP, PEIX, CECO)

Paul Ausick — Tue, 28 Feb 2012 17:20:57 +0000

At about noon today, all three major US stock indexes pushed their way into positive territory, with the DJIA up nearly 24 points at about 13,005, the Nasdaq up more than 19 points at 2,986, and the S&P 500 up more than 4 points to 1,372. After moving lower this morning, markets rebounded following a strong report on consumer confidence, which came after weak reports on durable goods orders (more coverage here) and home prices (more coverage here). The dollar is weaker today, with the dollar index down -0.35% at 78.260. The stronger dollar is pushing most commodities up, although crude oil is down.

Among the major movers at around noon today are Alimera Sciences Inc. (NASDAQ: ALIM), Tibet Pharmaceuticals Inc. (NASDAQ: TBET), Office Depot Inc. (NYSE: ODP), Pacific Ethanol Inc. (NASDAQ: PEIX), and Career Education Corp. (NASDAQ: CECO).

Alimera is up about 67% at $3.86. Volume is already nearly 13x the daily average of about 256,000 shares traded. The eyecare drug maker received a positive outcome from a European regulatory body for its ILUVIEN treatment.

Tibet Pharma is up about 26% at $1.89. Volume is already 35x the daily average of 106,000 shares traded. The drug maker is being taken private by its CEO and chairman for $3/share.

Office Depot is up nearly 17% at $3.52. Volume is already 2.5x the daily average of around 4 million shares traded. The office supply retailer reported better-than-expected earnings and revenues this morning.

Pacific Ethanol is down about -24% at $1.23. Volume is already nearly double the daily average of around 6.6 million shares traded. The ethanol maker’s reported earnings fell short of expectations. More coverage here.

Career Education is down nearly -16% at $31.67. Volume is already higher than the daily average of around 1.6 million shares traded. The for-profit education company posted a weak earnings report this morning.

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: ALIM, CECO, ODP, PEIX, TBET

Top Analyst Upgrades & Downgrades (AGCO, APOL, BSX, CECO, DNDN, FDX, GS, HUN, ITW, INTC, KSS, SNDK, AMTD, TRV, UPS, URBN, VOD, HOGS)

Administrator — Fri, 06 Jan 2012 13:19:44 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Friday morning.

AGCO Corporation (NYSE: AGCO) Maintained Outperform as Bull of the Day at Zacks.
Apollo Group Inc. (NASDAQ: APOL) Reiterated Outperform and Raised Target to $60 at Credit Suisse.
Boston Scientific Corporation (NYSE: BSX) Maintained Hold but lowered estimates at Argus.
Career Education Corporation (NASDAQ: CECO) Cut to Hold at Argus.
Dendreon Corporation (NASDAQ: DNDN) Reiterated Neutral with $10 target at Baird.
FedEx Corporation (NYSE: FDX) Started as Outperform at Wells Fargo.
Goldman Sachs Group Inc. (NYSE: GS) Cut to Market Perform by Wells Fargo.
Huntsman Corporation (NYSE: HUN) named as Value Stock of the Day at Zacks.
Illinois Tool Works. Inc. (NYSE: ITW) Cut to Neutral at Credit Suisse.
Intel Corporation (NASDAQ: INTC) Cut to Neutral at Stern Agee.
Kohl’s Corporation (NYSE: KSS) Cut to Hold at Argus.
SanDisk Corporation (NASDAQ: SNDK) Raised to Buy at Stern Agee.
TD AMERITRADE Holding Corporation (NASDAQ: AMTD) Raised to Buy at Deutsche Bank.
The Travelers Companies, Inc. (NYSE: TRV) Raised to Outperform at Wells Fargo.
United Parcel Service, Inc. (NYSE: UPS) Started as Market Perform at Wells Fargo.
Urban Outfitters Inc. (NASDAQ: URBN) Started as Underperform and named as Bear of the Day at Zacks.
Vodafone Group PLC (NYSE: VOD) Raised to Buy at Goldman Sachs.
Zhongpin, Inc. (NASDAQ: HOGS) Started as outperform at Oppenheimer.

If you enjoyed this morning’s Wall Street research notes, you can sign up to receive these directly in your inbox each morning by joining our free email list in the box below. We also include major movers, key stock calls, news on Warren Buffett and other gurus, as well as special exclusive feature stories.

JON C. OGG

Filed under: Analyst Calls Tagged: AGCO, AMTD, APOL, BSX, CECO, DNDN, FDX, GS, HOGS, HUN, INTC, ITW, KSS, SNDK, TRV, UPS, URBN, VOD

Expected Gains in For-Profit College Stocks (APOL, WPO, STRA, DV, CECO)

Paul Ausick — Tue, 06 Dec 2011 18:29:59 +0000

After a shaky start to the year, the for-profit college sector has pulled itself back up. With one exception, however, four of five stocks we looked at are still down for the year and all five remain below 52-week highs. The five stocks we reviewed are Apollo Group, Inc. (NASDAQ: APOL), The Washington Post Co. (NYSE: WPO), Strayer Education Inc. (NASDAQ: STRA), DeVry, Inc. (NYSE: DV), and Career Education Corp. (NASDAQ: CECO).

The for-profits face tighter rules on recruiting and somewhat closer oversight on graduation and job placement rates. Student loan defaults continue to be a problem, and last month the US Government Accounting Office reported on widespread cheating at some of the schools. And one of the schools, Career Education Corp., had its CEO resign. All in all, what was once a high-flying sector has lost a good deal of its appeal.

Apollo Group, which owns the University of Phoenix, is the largest of the for-profit operators based on student enrollment. The company’s stock has a median target price of $54.00, up from $53.00 on November 1st. At a current price of $50.01 at around noon today, the potential upside for the shares is 8%. Shares have gained nearly $4.00 since November 1st.

The Washington Post owns the Kaplan schools. The company’s median target price is a meaningless $275.00 from a single broker who must not have noticed that the share price is now $349.00. The drag on the company’s stock comes from its newspaper operations, of course, without which the Post would be operating at a loss.

Strayer has a median target price of $100.00, down from $104.00 on November 1st. The current share price is $99.43, leaving an implied gain of less than 1%. The company recently purchased the Jack Welch Institute of Management, which gave the stock a shot in the arm. Shares are down about -28% for the past 12 months.

DeVry has a median target price of $52, slightly lower than its target of $52.50 on November 1st. The shares are trading today at $35.22, for a potential upside of 47.6%. The stock goes ex-dividend tomorrow in advance of its twice-yearly dividend payment of $0.15/share. DeVry’s stock is down nearly -20% for the past 12 months.

Career Education has a median target price of $9.50, a drop of more than -50% from its target of $20.00 on November 1st. Shares are trading today at $7.33, for a potential upside of 29.6%. Of all these stocks, this one has been hammered the most over the past year, with a share price loss of nearly -61%. The CEO resigned last month, and 49 of the company’s schools must this month show reasons why they should not lose their accreditation.

Of these schools, only Apollo, which has seen its share price grow by about 37% in the past year offers even the remotest opportunity for investors. The stock’s 52-week high is less than $0.25 higher than its new target price, and the company claims that it came out clean in the GAO cheating investigation because it was one of the three schools to deny admission to students based on insufficient credentials. Enrollments are the key for Apollo, though, and it will have to spend more to keep those enrollments up.

The rest of this group is so weak that even lowered targets may be well out of reach. Overall, for-profit schools are unlikely to repeat the rapid growth they managed just a few years ago. There could be some consolidation in this sector or some closures. Either would be a big help.

Paul Ausick

Filed under: Analyst Calls Tagged: APOL, CECO, DV, STRA, WPO

For-Profit Colleges Stung in GAO Report (APOL, EDMC, WPO, DV, ESI, STRA, CECO)

Paul Ausick — Wed, 23 Nov 2011 15:01:29 +0000

For-profit colleges have had a tough couple of years. First, the colleges were forced to change admissions procedures in a way that has cost them enrollment. Then student loan default rates and job placement rates came under fire. Share prices tumbled, although a decision by the US Department of Education in July delayed implementation of some rules until 2015. Now the schools have taken another shot.

The US Government Accountability Office (GAO) has issued a new report on for-profit education that was prepared at the request of US Senator Tom Harkin (D-IA), a long-time critic of the for-profit sector. This report focused on how closely the colleges adhered to their own policies related to admissions credentials, cheating, and counseling students who withdraw.

The GAO does not identify the 15 schools included in the study by name, but it does say that the study did include the top 5 based on enrollment in 2008. The likely suspects include Apollo Group Inc. (NASDAQ: APOL), Education Management Corp. (NASDAQ: EDMC), The Washington Post Co. (NYSE: WPO), DeVry, Inc. (NYSE: DV), ITT Educational Services Inc. (NYSE: ESI), Strayer Education Inc. (NASDAQ: STRA),. and Career Education Corp. (NASDAQ: CECO).

The study resembled an undercover sting operation. The GAO tried to enroll students with false high school credentials, and once admitted, the students plagiarized assignments, turned in clearly incorrect assignments, and regularly skipped class. The overall results indicated that 8 of the 15 schools mostly complied with their own policies, while at the other 7 the GAO said it found “mixed results.”

Regarding academic performance policies, the GAO had this to say:

At 6 colleges, instructors acted in a manner consistent with school policies in this area, and in some cases attempted to contact students to provide help outside of class. One or more instructors at 2 colleges repeatedly noted that the students were submitting plagiarized work, but no action was taken to remove the student. One or more instructors at the 4 remaining colleges did not adhere to grading standards. For example, one student submitted photos of celebrities and political figures in lieu of essay question responses but still earned a passing grade.

That totals only 12 schools because 3 of the schools refused to admit students who could not provide acceptable high school credentials.

By itself, this study probably won’t have much effect on the for-profit schools share prices, but it does let investors know that the schools’ policies and practices remain under scrutiny. There is little question that the prosperity that these schools achieved in the 2000s was largely due to the huge increase in federal student loan dollars that flowed in as the schools’ enrollments surged. Changes in federal law and continuing investigative pressure will definitely have an impact on these schools going forward.

Senator Harkin is also investigating the recruiting of military veterans by the for-profit schools. Due to a quirk in the law, veteran’s benefits are not included in the requirement that no more than 90% of a school’s revenue can come from federal financial aid programs. In 2010-2011, veteran’s education payments to 8 for-profit schools increased by 86%, to $627 million, about 14% of the $4.4 billion total veteran education benefits for the 2010-2011 academic year.

For-profit schools will stay on the radar both because of the ongoing investigations into their activity, but also because budget-cutting time in the US Congress could hit these schools pretty hard.

Paul Ausick

Filed under: Austerity, Compensation, General, Politics, Regulation Tagged: APOL, CECO, DV, EDMC, ESI, STRA, WPO

24/7 Wall St. Closing Bell (FCX, CECO, CLX, COL, BSX, MDT, FICO, LAMR, OWW, KSWS, RIG, MDVN, SNSTA, SONO, DNDN, ANF, CLWR)

Paul Ausick — Thu, 03 Nov 2011 20:05:46 +0000

Stock markets. Equity markets opened sharply higher this morning before falling into negative territory before the ISM and factory order reports were released. The ISM index came in lower than expected, but factory orders grew by 0.3%, slightly better than expected. New pressure on Greece to forgo its referendum on the EU bailout package helped push share prices up, as did strength in tech stocks. Crude oil is up nearly 1.5% and gold is up nearly 2%, while the dollar is down against both the euro and the British pound.

Closing bell. The unofficial closing bells put the DJIA up more than 207 points to 12,043.19 (1.75%), the NASDAQ rose nearly 58 points (2.2%) to 2,697.97, and the S&P 500 rose 1.87% or more than 23 points to 1,261.10.

Analyst upgrades and downgrades. There were several analyst upgrades and downgrades today, including Freeport-McMoran Copper & Gold Inc. (NYSE: FCX) started at ‘overweight’ at Barclays. Career Education Corp. (NASDAQ: CECO), Clorox Corp. (NYSE: CLX), and Rockwell Collins Inc. (NYSE: COL) were cut to ‘underperform’ at BofA/Merrill Lynch; and Boston Scientific Corp. (NYSE: BSX) and Medtronic Inc. (NYSE: MDT) were started as ‘outperform’ at Credit Suisse.

Market reacts to earnings. Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Fair Isaac Corp. (NYSE: FICO) is up about 25%, at $33.95; Lamar Advertising Co. (NASDAQ: LAMR) is up nearly 25%, at $26.18; Orbitz Worldwide, Inc. (NYSE: OWW) is up 40%, at $2.66; K-Swiss Inc. (NASDAQ: KSWS) is down more than -33%, at $3.09; and Transocean Ltd. (NYSE: RIG) is down about -13%, at $48.73.

Several other standouts from today are as follows…

Medivation Inc. (NASDAQ: MDVN) is up 140%, at $39.74 after posting a new 52-week high of $40.15 earlier today. The company reported that an experimental prostate cancer drug reduced death risk by 37%.

Sonesta International Hotels Corp. (NASDAQ: SNSTA) is up nearly 41%, at $30.65 after posting a new 52-week high of $31.06. The company has agreed to be acquired for $31/share by an affiliate of Hospitality Properties Trust (NYSE: HPT).

SonoSite, Inc. (NASDAQ: SONO) is up about 29%, at 39.62 after posting a new 52-week high of $40 earlier today. Sonosite is reported to have hired Morgan Stanley to find a buyer for the company and talks are already in progress with potential buyers, including Samsung Electronics.

Dendreon Corp. (NASDAQ: DNDN) is down more than -37%, at $6.53 after setting a new 52-week low of $6.52 earlier today. The company today reiterated its forecast for only modest sales of its Provenge anti-cancer drug.

Abercrombie & Fitch Co. (NYSE: ANF) is down nearly -20%, at $59.51. The company reported slowing sales in Europe, a region where the company had pinned its hopes for growth.

Clearwire Corp. (NASDAQ: CLWR) is down about -14%, at $1.75. The company is seeking additional financing and has been unable to get its largest customer and majority shareholder Sprint Nextel Corp. (NYSE: S) to commit to the financing.

Stay tuned for Friday. The G-20 summit opened today and will continue meeting tomorrow and over the weekend. Monster Worldwide Inc. (NYSE: MWW) releases its October report on US online job demand. We have noted the following event (all times Eastern):

8:30 a.m. – Non-farm payroll data for October

Paul Ausick

Filed under: Market Close Tagged: ANF, BSX, CECO, CLWR, CLX, COL, DNDN, FCX, FICO, KSWS, LAMR, MDT, MDVN, OWW, RIG, SNSTA, SONO

Top Analyst Upgrades & Downgrades (NLY, BSX, CECO, CLX, CNH, DNDN, FCX, HXL, HSP, MDT, COL, SWIR, STJ, SLF, TEVA, TDW, WYN)

Administrator — Thu, 03 Nov 2011 12:34:47 +0000

These are some of Thursday’s top analyst upgrades, downgrades, and initiations seen from Wall Street research calls.

Annaly Capital Management, Inc. (NYSE: NLY) Raised to Outperform at Wells Fargo.
Boston Scientific Corp. (NYSE: BSX) Started as Outperform at Credit Suisse.
Career Education Corp. (NASDAQ: CECO) Cut to Underperform at BofA/ML.
Clorox Corp. (NYSE: CLX) Cut to Underperform at BofA/ML.
CNH Global N.V. (NYSE: CNH) named as Value stock of the day at Zacks.
Dendreon Corporation (NASDAQ: DNDN) Cut to Neutral at Goldman Sachs.
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) Started as Overweight at Barclays.
Hexcel Corporation (NYSE: HXL) Cut to Neutral at BofA/ML.
Hospira Inc. (NYSE: HSP) cut to Underperform ar Bear of the Day at Zacks.
Medtronic Inc. (NYSE: MDT) Started as Outperform at Credit Suisse.
Rockwell Collins Inc. (NYSE: COL) Cut to Underperform at BofA/ML.
Sierra Wireless Inc. (NASDAQ: SWIR) downgraded at Raymond James and Morgan Keegan.
St. Jude Medical (NYSE: STJ) Started as Neutral at Credit Suisse.
Sun Life Financial Inc. (NYSE: SLF) Cut to Underperform at Credit Suisse.
Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) Raised to Overweight at Morgan Stanley.
Tidewater Inc. (NYSE: TDW) Cut to Hold at Argus.
Wyndam Worldwide (NYSE: WYN) named Bull of the Day at Zacks.

JON C. OGG

Filed under: Analyst Calls Tagged: BSX, CECO, CLX, CNH, COL, DNDN, FCX, HSP, HXL, MDT, NLY, SLF, STJ, SWIR, TDW, TEVA, WYN

Where Was Career Education Corporation’s Board?

247wallst — Thu, 03 Nov 2011 10:37:07 +0000

Career Education Corporation (NASDAQ: CECO) posted poor earnings, fired its CEO, and its board announced that an investigation by law firm Dewey & LeBoeuf had “confirmed the existence of improper placement determination practices at certain of the Company’s Health Education segment schools, and, for the Company’s Health Education and Art & Design segment schools.“ Where was the board of directors when the improper behavior was going on?

Additionally, the board failed to detect another problem. The Attorney General of the State of New York is reviewing practices at Career Education. Some of the company’s policies may not have complied with state consumer protection rules.

The corporation’s board does have members who should have seen warning signals if they had been on guard as board members should be. Lead director Leslie T. Thornton was a former chief of staff to the U.S. Secretary of Education. She is currently a partner at law firm Dickstein Shapiro Morin & Oshinsky. She has been a director at Career Education since 2005. Thornton can hardly take the position that she does not know that company’s operations very well and could not understand the legal ramifications of certain management decisions.

Director David W. Devonshire has an impressive background as a financial executive. He was executive vice president and chief financial officer of Motorola. He has a degree in accounting and an MBA. Board member Greg L. Jackson also has an MBA. He has been a mutual fund portfolio manager, which means he has spent years reviewing corporate business practices and balance sheets.

The board of Career Education Corporation will say that CEO Gary E. McCullough effectively slipped the company’s misdeeds past them. Thornton, the lead director, will take his place. She, more than anyone else outside management, should have been alert to the company’s problems.

Where were the board members when Career Education was acting in ways it should not have? Clearly not performing their fiduciary roles.

Douglas A. McIntyre

Filed under: Corporate Governance, General Tagged: CECO

24/7 Wall St. Closing Bell (AWK, C, JPM, CAT, DE, VLO, PNX, NOR, HGG, CECO, END, VG, AMRS, DMND, PG, SINO, OXGN, RTK, RNF)

Paul Ausick — Wed, 02 Nov 2011 20:08:58 +0000

Stocks opened higher this morning and the gains held up pretty well all day. The Federal Reserve Open Market Committee report contained no big surprises, with interest rates continuing to be held between 0%-0.25%. The dollar is a bit weaker, leading to a small rise in oil and commodity stocks. Fed chairman Ben Bernanke’s prepared remarks were issued prior to his press conference, and the Fed has lowered its estimate of US economic growth for the year from 2.7%-2.9% to 1.6%-1.7%. The growth forecast for 2012 has also been trimmed, from 3.3%-3.7% to 2.5%-2.9%.

The unofficial closing bells put the DJIA up nearly more than 177 points to 11,835.74 (1.52%), the NASDAQ rose more than 33 points (1.27%) to 2,639.98, and the S&P 500 rose 1.61% or more than 19 points to 1,237.89.

There were several analyst upgrades and downgrades today, including American Water Works (NYSE: AWK) added to Zack’s Strong Buy List. Citigroup Inc. (NYSE: C) and JP Morgan Chase & Co. (NYSE: JPM) cut to ‘hold’ at S&P Capital IQ; Caterpillar Corp. (NYSE: CAT) started at ‘overweight’ at Morgan Stanley; Deere & Co. (NYSE: DE) started at ‘underweight’ at Morgan Stanley; and Valero Energy Corp. (NYSE: VLO) reiterated ‘buy’ at Argus with a price target of $35.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Phoenix Companies Inc. (NYSE: PNX) up more than 27%, at $1.73; Noranda Aluminum Holding Corp. (NYSE: NOR) is up more than 21%, at $10.44; hhgregg, Inc. (NYSE: HGG) up more than 16%, at $14.09; Career Education Corp. (NASDAQ: CECO) is down nearly -467%, at $8.38, a new 52-week low; Endeavor International Corp. (NYSE: END) is down nearly -14%, at $7.66; and Vonage Holding Corp. (NYSE: VG) is down about -15%, at $2.65.

Several other standouts from today are as follows…

Career Education Corp., in addition to posting an awful quarterly report, also got hit by the resignation of the company’s CEO. Shares are down more than -47%, at $8.38, to give the shares a new range of $8.68-$27.60.

Amyris Corp. (NASDAQ: AMRS) is down more than -20%, at $15.41, having posted a new 52-week low earlier to give the stock a new range of $15.21-$33.99. The company’s earnings report revealed an EPS loss of -$0.97, much worse than expected. Shares were downgraded by Robert Baird from ‘outperform’ to ‘neutral’.

Diamond Foods, Inc. (NASDAQ: DMND) is down more than -17%, at $53.01, in a 52-week range of $43.14-$96.13. The company’s board is reviewing how walnut growers are being paid and will delay the annual report into next year. The company’s deal to by Pringles snack foods from Proctor & Gamble (NYSE: PG) could be in jeopardy because the company planned to use stock to make the acquisition.

Sino-Global America Shipping, Ltd. (NASDAQ: SINO) is up more than 81%, at $3.05, in a 52-week range of $1.20-$9.16. The company has signed a memorandum of understanding with a South African firm to act as Sino’s agent in that country. In shipping these days, any positive signal is a rare treat.

Oxigene, Inc. (NASDAQ: OXGN) is up nearly 12%, at $1.69, in a 52-week range of $0.82-$6.38. The company has set its third-quarter earnings release for next week, and investors are expecting good news on the company’s drug development efforts.

Rentech, Inc. (AMEX: RTK) is up about 21%, at $1.95, a new 52-week high, and a new 52-week trading range of $0.72-$1.95. The company continues to get a boost from the IPO of its spin-off of Rentech Nitrogen Partners, L.P. (NYSE: RNF).

Stay tuned for Thursday. We have noted the following events (all times Eastern):

8:30 a.m. – Initial unemployment claims
10:00 a.m. – Factory orders
10:30 a.m. – EIA Natural gas report
4: 30 p.m. – Federal Reserve Balance Sheet

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AMRS, AWK, C, CAT, CECO, DE, DMND, END, HGG, JPM, NOR, OXGN, PG, PNX, RNF, RTK, SINO, VG, VLO