{"id":1283,"date":"2003-08-27T00:14:34","date_gmt":"2003-08-27T04:14:34","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/dbnews\/post-secondary-elearning-stocks\/"},"modified":"2003-08-27T00:14:34","modified_gmt":"2003-08-27T04:14:34","slug":"post-secondary-elearning-stocks","status":"publish","type":"page","link":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/post-secondary-elearning-stocks\/","title":{"rendered":"Post-Secondary eLearning Stocks"},"content":{"rendered":"

<\/a><\/p>\n

Q&A: Wall Street Bullish on Post-Secondary eLearning Stocks<\/p>\n

Companies selling technology into the post-secondary market
\nwill encounter good growth potential, according to analysts
\nat a recent financial analysts roundtable discussion. The
\ndiscussion, hosted by the Wall Street Transcript, included
\nGary E. Bisbee III, an analyst at Lehman Brothers, Gerald
\nOdening, managing director of Jefferies and Co., and Jeffrey
\nSilber, managing director at Harris Nesbitt Gerard<\/p>\n

Here is an excerpt from the discussion: <\/p>\n

Q: What has gone on over the past year in the education
\nspace that’s important? <\/p>\n

Gerald Odening: Most of the questions coming up about this
\ngroup, which has performed superbly, have generally been
\nabout whether we are at a top in terms of valuation. My
\nfeeling is that the stock prices and multiples in the education
\ngroup for postsecondary will continue to rise. This is in contrast
\nto last year when a number of holders of the stocks were concerned
\nthat many people would be selling these stocks in 2003 when
\ntechnology and more cyclical sectors began to rebound. That didn’t
\nhappen, because year to date the postsecondary group is up over 60%. <\/p>\n

Q: What are the key drivers in this space over the next couple of years? <\/p>\n

Gary Bisbee: I think the drivers will continue to be similar to the
\ndrivers we’ve seen over the past couple of years. Due to the positive
\ndemographic backdrop, including a projected 15%-20% increase in total
\nstudent enrollment over the next decade, I think you’ll continue to
\nsee most of the publicly traded postsecondary companies adding
\nsomewhere between 5% and 10% new units per year. You’re going to
\nsee new campuses open in addition to acquisitions. I agree that
\nwe’ll continue to see a lot of those. <\/p>\n

On top of new schools, I think the pricing environment continues
\nto look strong, again, due to the state and local fiscal issues
\nthat we talked about earlier. So I think we should see a continuing
\ntrend of new campuses and also active strategies to grow the existing
\ncampuses. When combined with pricing and margin expansion I think the
\nmodel will be 15% student growth plus 5% pricing, which will give us
\n20% internal top-line growth, and with a bit of margin expansion
\n20%-25% earnings growth. <\/p>\n

Big picture drivers for the industry and these stocks continue to be
\nthe demographic outlook, the state funding issues that are leading
\nthese companies to gain market share, and the online trend. As Gerry
\nsaid, they’ve done a great job of attracting nontraditional students,
\nor students who were not successful in the traditional school system.
\nSo I think that another driver for these stocks will continue to be
\nthe online opportunities that they have. While the growth rates
\nprobably are unsustainable at the current levels, I think that a
\nlot of people have looked at the top line and haven’t focused enough
\non both the profitability and capital efficiency benefits of the
\nonline business model versus the campuses. Over time, I believe that
\nthe stocks can maintain their current multiple as people realize that
\nthe business model continues to improve. <\/p>\n

So in general I think the drivers will continue to be things that
\nhave driven growth in the past, which are good competitive positioning,
\ngaining market share, and continuing to innovate with online and other
\ndelivery methods. <\/p>\n

Q: What share of the market do the for-profits have at this point,
\nand where can it go over the next few years? <\/p>\n

Gary Bisbee: That’s a good question. By my estimate the for-profits
\nhave about 5% market share in 2003 as a percentage of enrollment,
\nand that number is up from about 1% in 1980. So there have been steady
\ngains. My expectation is that 5% can grow to be 8%-10% over the next
\ndecade, if not sooner. I think that the gains will be driven by pure
\nmarket share gains (mostly from the community colleges), in addition
\nto the for-profits’ ability to continue to attract nontraditional
\nstudents. Today, about one in four Americans over the age of 25 has a
\nbachelor’s degree, so there are somewhere on the order of 70 million
\npeople in the US work force who don’t have a bachelor’s degree. While
\nmost of these people are nontraditional students, I believe that the
\nfor-profits have demonstrated that they focused on this group and can
\noffer a more convenient solution to these people. So I think they will
\ncontinue to grow.<\/p>\n

from the Wall Street Transcript (subscription)<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Q&A: Wall Street Bullish on Post-Secondary eLearning Stocks Companies selling technology into the post-secondary market will encounter good growth potential, according to analysts at a recent financial analysts roundtable discussion. The discussion, hosted by the Wall Street Transcript, included Gary … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":299,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","meta":{"footnotes":""},"class_list":["post-1283","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/pages\/1283","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/users\/299"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/comments?post=1283"}],"version-history":[{"count":0,"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/pages\/1283\/revisions"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/dowbrigade\/wp-json\/wp\/v2\/media?parent=1283"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}