Legg Mason Cuts Career Education to Hold

Analyst Robert Craig says enrollment growth is slowing

Legg Mason downgraded Career Education (CECO ) to hold from buy.

Analyst Robert Craig says given the lack of a near-term catalyst, he is compelled to downgrade until the catalyst re-emerges. He says despite the company reporting a strong second quarter, enrollment growth is slowing. He notes the level of EPS outperformance that the Street has become accustomed to is expected to diminish. Craig thinks most of that slowing, which is compounded by heightened legal and regulatory concerns, is already reflected in the shares. He remains confident in the company's ability to navigate regulatory and legal challenges, and to continue to show above-average growth in the long term. He sees $1.85 2004 EPS and $2.45 2005 EPS.

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