|10:07 EDT||LINC, ESI, EDMC, APEI, DV, NAUH, STRA, APOL, COCO, LOPE, BPI, CECO||Apollo falls after being placed on probation by accreditor|
Apollo Group (APOL) disclosed in a regulatory filing last night that a team appointed by its accreditor had recommended that the company's main university be placed on probation. The team appointed by the Higher Learning Commission, a regional accreditor, recommended that Apollo's University of Phoenix be placed on probation because the school is not in compliance with regulations related to administrative structure and governance, Apollo reported. More specifically, the team found that Apollo has not given the university enough autonomy. In a note to investors earlier today, William Blair analyst Brandon Dobell wrote that he expects the Higher Learning Commission to uphold the findings of its team in June, and place University of Phoenix on probation until fall of 2014. The university will have to prove to the Higher Learning Commission, or HLC, that it has fixed the issues identified by that time, Dobell reported, adding that the university could lose its accreditation if the HLC determines that it is still not in compliance. While the analyst believes that the University of Phoenix's accreditation status will affect Apollo's shares until the university is removed from probation, he thinks it is "extremely unlikely" that the school will lose its accreditation. Dobell maintained a Market Perform rating on Apollo. He noted that the following for-profit education companies have obtained accreditation from the Higher Learning Commission: Bridgepoint (BPI), DeVry (DV), Grand Canyon University (LOPE); American Public University (APEI); Capella University (CPLA); Career Education (CECO); Education Management (EDMC); National American University (NAUH); Corinthian (COCO); and Kaplan (WPO). In early trading, shares of Apollo are down 24c to $17.59.