- The Washington Times - Monday, October 24, 2005

Higher enrollments at Laureate Education Inc.’s universities in Mexico and South America carried the company’s stock up 3 percent to close at $49.10 yesterday on the New York Stock Exchange.

The Baltimore company, which reported positive earnings Thursday, operates online university courses in the United States and brick-and-mortar universities for profit in Asia, Europe and Latin America.

The company reported Thursday that net income for its third quarter ended Sept. 30 rose 27 percent to $11.8 million (23 cents per share) from $9.3 million (19 cents) a year ago. The company’s stock rose $1.13 since the announcement.

The third-quarter results were slightly above industry forecasts of 21 to 23 cents per share. Analysts attributed the quarterly increase to higher enrollments than expected.

“Enrollments in Mexico came in pretty strong and enrollments in the Andes [Mountains] region was strong,” said Mark Hughes, a SunTrust Robinson Humphrey analyst in Nashville, Tenn., which is rating the stock as a buy.

SunTrust buys and sells Laureate stock for its customers, but the financial consulting firm does not own shares in the company.

University enrollment climbed 26 percent to 167,000 students in the third quarter. Online enrollment rose 28 percent to 26,000 students.

About 80 percent of Laureate’s revenue comes from international markets; 20 percent is from online courses. International universities are a lucrative market for Laureate, analysts say.

“In the international market, there is not nearly as much support from country governments on higher education. Mexico, for example, is spending more on primary education … and not really adding capacity at public universities,” Mr. Hughes said. “It creates a nice opportunity for private companies like Laureate to come in and provide education.”

Legg Mason Wood Walker, a Cleveland financial consulting group, also rated Laureate as a buy because of its high student retention, prospects for strong future enrollment and prospects for strong growth in Mexico and Central America, according to a company report.

“In addition … our buy recommendation remains intact, namely [because] the company remains well positioned to benefit from the favorable supply/demand dynamics for postsecondary education in international markets, especially Latin America and eventually in Asia,” the report said.

Legg Mason Wood Walker provides investment banking services to Laureate Education.

Laureate has announced intentions to open universities in Brazil and China, extending its international reach beyond its 18 universities in 13 countries.

“Those markets are very large and rapidly growing markets for higher education,” said Chris Symanoskie, director of investor relations for Laureate Education.

Mr. Symanoskie said one of the company’s key long-term competitive advantages is the Laureate International University Network, which gives its international students chances to study abroad and faculty members an opportunity to visit other universities in the 18-university network.

“Student enrollment is a key ingredient to financial performance,” Mr. Symanoskie said. “Student retention is high and length of stay is very strong.”



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