Laureate Education Soars 9% On Walden University Deal

Shares of Laureate Education rose 9.2% on Friday after the education company announced entering a definitive agreement to sell its Walden University business unit to Adtalem Global Education Inc. for $1.48 billion in cash. The deal is anticipated to complete toward the end of 2021.

Laureate Education’s (LAUR) Walden University is a for-profit online education provider focusing on graduate, bachelor’s, masters, and doctoral certificate programs. According to the company, Walden University was a pioneer in distance education and is currently the leader in digital learning in higher education. The university offers over 80 educational degree programs and students across the US and 120 countries are pursuing a degree course online.

Adtalem believes that the acquisition of Walden University would be accretive to its free cash flows and adjusted earnings per share. The Chicago-based workforce solution provider expects the transaction to add $60 million in non-GAAP free cash flow in the first year and contribute $0.75 per share to its earnings in the second year post-completion. (See LAUR stock analysis on TipRanks).

Stifel analyst Shlomo Rosenbaum reiterated his Buy rating on Laureate Education following the announcement. Rosenbaum believes that the transaction happening amid the current environment is positive for the company- especially as the deal is taking place earlier than expected- but noted that the price is about $220M less than anticipated.

Currently, the Street has a bullish outlook on the stock, with a Strong Buy analyst consensus. With shares down 24.5% year-to-date, the average analyst price target of $14 implies an upside potential of 5.3% from current levels.