Apollo Group "underperform"

03/25/03 - Barrington Research

NEW YORK, March 25 (New Ratings) - Analysts at Barrington Research reiterate their "underperform" rating on the Apollo Group (APOL:NASDAQ).

Shares of the Apollo Group, the largest higher education programs provider based in Phoenix, are currently trading at $48.55.

According to Barrington Research's research note published yesterday, the company is expected to meet expectations in 2Q03. The analysts, however, hint at the substantial rise in the company's stock price as a negative factor. The analysts say that they expect the company's earnings, enrolment and revenues growth rates to decelerate in the long-term. The analysts post the revenues estimates of the company at $288 million and operating margins at 20.6%.

The analysts say that they are concerned about the company's high fee reimbursement figures. Barrington Research believes that the management’s decision to reduce these figures would, however, affect enrolment. The company’s stock continues to have the maximum valuation compared to its peers in the higher education industry, add the analysts.

The EPS estimates for 2002, 2003 and 2004 are $0.87, $1.16 and $1.45 respectively. The P/E estimates for 2002, 2003 and 2004 are 55.8x, 41.9x and 33.5x, respectively.

Barrington Research maintains its "underperform" rating on the Apollo Group.