2U downgraded to Neutral from Overweight at Cantor Fitzgerald

Cantor Fitzgerald analyst Brett Knoblauch downgraded 2U to Neutral from Overweight with a price target of $1.50, down from $5.30. Management not disclosing before last quarter that its full-year revenue guidance included a large one-time payment from university partners that are terminating specific degree programs, coupled with 2U’s inability to generate positive free cash flow, has resulted in more investors asking questions about 2U’s looming debt maturities and its ability to repay or refinance those obligations, the analyst tells investors in a research note. The firm says 2U’s core degree business is deteriorating and the company is relying on one-time payments from university partners that are terminating their contracts to fund operations.