Sylvan Learning (SLVN) shares fell after Bank of America downgraded them to market perform from buy.
Analyst Howard Block says the downgrade is due to the continued lack of transparency within the company's business and concerns related to earnings quality. He says the shares are fully valued at current levels. He notes the company is attempting to clarify its business to investors, but digressed in the second quarter. The lack of business transparency overshadowed underlying strong fundamentals with some divisions, he says. Block believes the catalyst for revisiting his rating rests more with management's action toward clarification and transparency than with visibility into improving fundamentals.
He cut $0.93 2002 EPS estimate to $0.92, and sees $1.14 in 2003.