(Adds analyst comments, outlook)
By Mridhula Raghavan
May 22 ITT Educational Services Inc, a
for-profit college operator, withdrew its full-year forecast and
warned of a fall in new enrollment after rising for three
straight quarters, adding to the uncertainty surrounding the
The company lost a third of its market value after ITT
Educational said the fall in new enrollment would continue in
the current quarter.
Shares of other education companies such as Strayer
Education Inc, DeVry Education Group Inc, Career
Education Corp and Grand Canyon Education Inc
also fell by up to 5 percent.
ITT estimated a 4 percent fall in new student enrollments to
16,746 in the first quarter ended March 31. The company said it
expected total student enrollments to have fallen 6 percent to
"The stock is reacting like (ITT) is going to go out of
business," said Wells Fargo analyst Trace Urdan. He said the
reported results did not warrant such a huge sell-off.
ITT said it lost several recruitment days and received fewer
inquiries in the first quarter due to the severe winter in the
The company expects new enrollment to fall 10-15 percent in
the current quarter ending June, Chief Executive Kevin Modany
said on a conference call.
ITT, which offers technology-oriented undergraduate and
graduate degree programs through its ITT Technical Institutes
and Daniel Webster College, has more than 140 institutions in
nearly 40 states.
The company withdrew its 2014 forecast, citing uncertainties
related to the accounting of its PEAKS private student loan
program and its guarantee obligations under it.
ITT is yet to file its 2013 annual report for the same reason.
For-profit colleges have come under fire in recent years for
their poor track record in helping students find employment.
Several state attorneys general have sought information
related to recruitment, placement and lending practices from ITT
and other for-profit colleges such as Career Education Corp
, Corinthian Colleges Inc and Education
In February, the U.S. Consumer Financial Protection Bureau
sued ITT and said it exploited students and pushed them into
"high-cost private loans" that leave them strapped with debt.
ITT said on Thursday that it does not expect ruling on its
motion to dismiss the complaint before late 2014.
The company's shares recouped some of their losses to be
down 22 percent at $20.01 in late afternoon trading on the New
York Stock Exchange. They fell to a year low of $17.54 earlier
in the session.
(Reporting by Mridhula Raghavan in Bangalore; Editing by Kirti
Pandey and Sriraj Kalluvila)