Universal Tech Institute’s (UTI) first-quarter 2011 earnings beat the Zacks Consensus Estimate, and climbed 10.5% from the prior-year quarter. The average enrollment of the educational institute rose 8.5% but dropped 690 basis points sequentially.
Moreover, the rate of fall in the enrollment accelerated to 13% during the quarter, following a decline of 5% in fourth-quarter 2010. Management warned that enrollment of new students for fiscal 2011 will be below the prior-year level due to regulations proposed by the Department of Education, and will consequently result in single-digit revenue growth.
Hence, we maintain our Underperform rating on the stock. We have a long-term Underperform recommendation on the stock. Our target price of $17.00, 12.4X 2011 EPS, reflects this view.
UNIVL TECH INST (UTI): Free Stock Analysis Report
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