Things are pretty quiet in analyst land; the main focus at the moment is on a comparatively small stock, education company Navitas, which runs courses across Australia, UK, Canada, Singapore, Kenya, Zambia, Indonesia and Sri Lanka for students and professionals. The stock is on a pretty high forward earnings multiple of over 17 times, but has a dividend yield of over 5%. Macquarie rates it neutral, with a price target of $3.39:
“As expected Australian enrolments again reported a strongly negative comp, down 13%, driven by weaker international student volumes. However, declines were lower than the – 21% reported for third semester 2011. A partial offset was a much stronger domestic contribution up 20% (domestic students typically make up ~11% of March enrolments). March enrolments are the largest intake of the university year and tend to set up the majority of earnings for the year ahead.”
Merrill has a buy with a price target of $3.79, citing good fundamentals:
“NVT trades at 15x 2013F versus 17x through-the-cycle average. In the mid-term we see the growth outlook improving aided by a looser regulatory environment taking hold (FY13F driver). Near-term we accept the group lacks catalysts and management will need to provide clarification that SAE (disappointed in H1) is being controlled. Our PO is supported by a blended mix of through-the-cycle average PER and DCF. Risks: (1) SAE struggles to generate student growth and (2) the Knight Review fails to stimulate international student growth.”
Deutsche has a hold, citing the high $A as a problem, which is especially relevant to Australian enrolments:
“In our view the business still faces challenges from a high AUD: increased competition from other countries and increased uncertainty around the SAE growth profile. With the stock trading within 10% of our PT we maintain our Hold.”
Navitas is a global player which should help it with currency issues. It is also a global services company, something all too rare in Australia. For diversification away from houses and holes it is worth a look.