Career Education (CECO) Skyrockets on European Asset Sale

Jacob Harper |

Following the planned asset sale of its European business, “storefront academy” Career Education Corp. (CECO) saw its shares rise over fifty percent on Oct. 25.

The Schaumberg, IL-based for-profit education center is divesting from its operations in Paris and Monaco, selling their locations there to equity firm Apex Partners for $350 million. The deal is expected to close by the end of 2013.

Career Education has struggled along with the rest of the for-profit educational sector. This downturn can most likely be attributed to increased competition from traditional non-profit schooling, and as the Wall Street Journal put it, a “growing skepticism about the value of high-cost education.” Rival Apollo Group Inc. (APOL) , considered a bellwether in for-profit education, has likewise been suffering mightily, closing half its brick-and-mortar locations in 2012, as enrollment dwindles and storefronts are closed to cut costs.

Despite the precipitous drop-off in the for-profit sector, Wells Fargo (WFC) upgraded Career Education on the expected cash infusio, raising their rating from market perform to outperform. In the report, analyst Wells Fargo analyst Trace Urdan wrote, “With the expected cash infusion, we now believe (Career Education’s) shares are worth $5-7 (up from $2.50-4.80) based on our sum of the parts analysis, for a potential mean return of 60% against our current expectations.”

Career Education spiked 53.16 percent In early trading to hit $5.82 a share.

 

(image courtesy of Flickr)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
APOL Apollo Education Group Inc. 9.48 -0.01 -0.11 446,247
CECO Career Education Corporation 9.98 -0.08 -0.75 269,040
WFC Wells Fargo & Company 54.26 0.68 1.26 18,452,616
ARRAF Arria Nlg Plc Ord 0.25 0.00 0.00 0

Comments

Emerging Growth

Veritas Pharma Inc.

Veritas Pharma Inc, formerly Seashore Organic Medicine Inc is an emerging producer and distributor of medical marijuana.

Private Markets

Spotify

Spotify is a online music service offering providing digital content from a range of record labels and artists. Users can browse through the interface by artist, album, genre, playlist, record…

Ozobot by Evollve Inc

Ozobot is a world leader in compact super intelligent robots that entertain and educate through fun interactive gaming.