Apollo Education (NASDAQ:APOL) to Remain Range-Bound Says FBR

With earnings for Apollo Education (NASDAQ:APOL) needing to be downwardly revised by analysts because of a lower revenue outlook, FBR sees the share price of Apollo remaining range-bound at this time.

FBR noted, "With lower starts persisting for some time, we expect the stock to remain range-bound as consensus estimates still need to be revised lower due to a weaker revenue outlook. That said, we believe management is now taking appropriate steps to improve student quality, which eventually should lead to better student outcomes and reduced regulatory scrutiny. In the near term, we expect shares will remain volatile until we attain clarity around the Department of Education's gainful employment proposal, which is still on track to be finalized in early 2011. Ultimately, however, we believe that Apollo's strong brand and steady cash flow and earnings generation should provide support to the shares at current levels."

FBR Capital reiterates a "Market Perform" on Apollo Education, which closed Tuesday at $40.74, gaining $4.80, or 13.36 percent. FBR has a price target of $40 on Apollo.