Apollo Valuation Overdiscount Regulatory Risk

A San Francisco presenter likes Apollo Group (NASDAQ: APOL, $50.45) at this level. The current valuation overdiscounts the regulatory uncertainty in the for-profit education space. Apollo's student and program mix mitigate any potential hit to enrollment numbers and revenues from the DOE ruling expected in November. The new orientation program will curb dropouts and loan defaults. The company has solid global expansion opportunities through its joint venture with the Carlyle Group. The downside is very limited at this point and the steady case scenario of $5+ eps can translate into a 60-100% upside.