Why Bridgepoint Shares Bounced Back

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 Bridgepoint Education (NYSE: BPI  ) surged 21% today after its Ashford University unit received accreditation approval yesterday.  

So what: An unaccredited school can lose access to government financial aid, which accounts for the vast majority of revenue, so today's news removes a huge cloud of uncertainty over Bridgepoint. While the company still faces some student enrollment headwinds, Ashford's accreditation approval makes the stock significantly less speculative.

Now what: Management also said that it expects significant cost improvements in upcoming quarters. "We have determined that we can make meaningful cost adjustments in areas that will not sacrifice the commitments and investments we made to improve student learning, success and outcomes," said CEO Andrew Clark. "When fully implemented we anticipate that the annualized labor and operational cost savings from these changes will be approximately $85 million dollars." When you couple Bridgepoint's steadily improving financial picture with its rapidly improving regulatory issues, the stock is certainly worth looking into.

Interested in more info on Bridgepoint? Add it to your watchlist.


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