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.
