Educators (APOL) (STRA) (DV) (ESI) Continue to Fall

Shares of for-profit educators like Apollo Group Inc. (APOL), Strayer Education Inc. (STRA), DeVry Inc. (DV) and ITT Educational Services Inc. (ESI) continue to fall, this time on the weak revenue guidance from Apollo of $4.25 billion, down from analyst estimates of $4.55 billion.

The overall sector has been under pressure for some time, and everyone time a negative catalyst comes about it is hit hard, underscoring the fragility of the for-profit business market at this time.

Apollo was trading at $39.66, down $2.69, or 6.35 percent, as of 1:51 PM EDT. Strayer was at $126.90, falling $6.77, or 5.06 percent. DeVry was trading at $54.23, down $0.70, or 1.27 percent. ITT Educational was at $67.43, down $3.24, or 4.58 percent.

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.

Apollo Education (NASDAQ:APOL) Negatively Affected by Gainful Employment (GE) Says Deutsche (NYSE:DB)

Deutsche Bank (NYSE:DB) sees the lengthy process concerning Gainful Employment as a negative for Apollo Education (NASDAQ:APOL), which could stretch out to Spring before it is finalized.

"The only hope for a major change to GE would be a compromise between the DoE and Republicans, but that is a low probability event, in our view," said Deutsche.

Deutsche lowered their full year 2011 and full year 2012 EPS estimates to $4.26 for both of them from $4.61 and $5.02. They are also slashing their price target by $5 to $60 to go inline with their latest estimates of lower enrollment. They are decreasing their February quarter new enrollment estimate from 26% to 37%, May from 21% to 34%, and their August from 18% to 26%.

Apollo Group closed Tuesday at $39.15, dropping $0.83, or 2.08 percent.