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Apollo Drops on Rating Cuts After Enrollment Declines

(Corrects timing of last biggest decline in first and second paragraphs.)

Jan. 9 (Bloomberg) -- Apollo Group Inc., owner of the University of Phoenix, fell the most in almost three months after new enrollment declined for a third straight quarter and two analysts cut their ratings.

Apollo, based in Phoenix, tumbled 7.8 percent to $19.32 at the close in New York, the most since Oct. 17. The company, the biggest U.S. for-profit college, has lost 66 percent of its value in the past 12 months, while an index of 13 for-profit colleges has fallen 51 percent.

Apollo, which has faced increased scrutiny from education regulators and state attorneys general, said yesterday that it expects to be put on “notice” status by its accreditor, the Higher Learning Commission. The company said total enrollment dropped 14 percent while the number of new students signing up for classes during the quarter fell 15 percent.

“While a major restructuring program, a healthy balance sheet and lowered expectations may set the stage for a turnaround, limited visibility, declining revenue per student and new accreditor problems make it difficult to recommend the stock with conviction,” said Suzanne Stein, an analyst with Morgan Stanley & Co. in New York, in a note to clients.

Morgan Stanley and First Analysis Corp. downgraded the shares to equalweight, the equivalent of a hold rating, from overweight.

To contact the reporter on this story: John Lauerman in Boston at

To contact the editor responsible for this story: Lisa Wolfson at

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