|10:50 EDT||CECO, COCO, WPO, ESI, EDMC||For-profit education stocks rise after Career Education sells assets|
Many for-profit education stocks are climbing after a private equity firm agreed to buy the European assets of one of the companies in the sector, Career Education (CECO). WHAT'S NEW: Career Education disclosed in a regulatory filing last night that it had agreed to sell its European education assets to private equity firm Apax Partners for $276.5 million in cash. The deal is expected to close by December 27, Career Education stated. ANALYST REACTION: In a note to investors, Wells Fargo analyst Trace Urdan responded to the news by upgrading Career Education to Outperform from Market Perform. Urdan reported that he had previously estimated that Career Education's European assets were worth only $106 million to $127 million, The deal is likely to reduce Career Education's overhead costs, and the transaction suggests that the company is ready to take bold actions to revitalize its U.S. schools, Urdan contended. Meanwhile, Piper Jaffray analyst Peter Appert wrote that Career Education would use the cash from the deal to more effectively pursue initiatives that could boost its growth. Nevertheless, the analyst thinks the company's fundamentals remain weak, and he kept a Neutral rating on the stock. PRICE ACTION: In mid-morning trading, Career Education jumped 54% to $5.85. Many of its peers advanced as well, including Corinthian College (COCO), which rose 2.4% to $2.40, ITT Educational (ESI), which gained 4.5% to $41, Education Management (EDMC), which added 5.4% to $14.90, and Washington Post (WPO), which was up 1.3% to $658.