Career Education Shares Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of for-profit educator Career Education (Nasdaq: CECO  ) swooned in early trading, falling as much as 10% after the stock was downgraded by a Wall Street analyst.

So what: Investors often look to Wall Street analysts for their views because they closely follow the companies they cover. So it's little surprise that investors would react harshly after an analyst at Argus Research cut Career Education's shares from buy to hold.

Now what: As I like to remind investors, no matter how closely analysts may follow a company, their rating on the stock is still just one person's view. To be sure, the analyst's take could be a good reason for shareholders to revisit their assumptions for the stock, but it's more likely foolish than Foolish to sell simply because an analyst has modified a rating.

Of course, it's also notable to point out that most of the losses on Career Education didn't hold. Fellow for-profit educator Apollo Group (Nasdaq: APOL  ) saw its shares jump today after the company announced better-than-expected fiscal first-quarter earnings. The report lifted the entire sector, and other educators, including DeVry (NYSE: DV  ) and Strayer (Nasdaq: STRA  ) , were climbing on hopes that what's good for Apollo will be good for all.

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Fool contributor Matt Koppenheffer has nofinancial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 09, 2012, at 12:29 PM, TruthAdvocate wrote:

    Career Education Corporation is known for opening and closing schools with no regard for students and faculty and worthless degrees that follow students into the workforce or other colleges.

    CEC is being sued by countless parties including FCC, students and faculty. This company has seen it's last year in operation.

    Stay away from CEC shares.

  • Report this Comment On January 11, 2012, at 2:37 PM, Mulkku wrote:

    Quality will prevail in long run, STRA seems to deal better quality than most peers. And also thinks about investor same time

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