Bank of America Corp (NYSE: BAC) lowered its earnings outlook and stock ratings on several for-profit colleges citing regulatory uncertainty.
Analysts Sara Gubins, David Chu and David Ridley said that earnings for these companies will decline in 2011 and 2012 as the industry adjusts to new federal regulation and additional scrutiny, but the analysts said that earnings-per-share growth may be about 10% I nthe longer term if executives at these companies can adapt to the new regulatory environment.
“We are trimming estimates due to both the regulatory impacts and companies’ responses to these proposed regulations,” the New York-based analysts wrote. “Companies will have to manage through a challenging few years as they adapt to new regulations.”
Corporations which offer for-profit post-secondary education have been under scrutiny by the U.S. Congress and President Obama’s administration have proposed new limits on federal student aid.
Last week, Sen. Dick Durbin said that new legislation was needed to prevent for-profit schools from taking federal aid while their graduates are unable to pay off their student loans. Durbin said that for-profit universities get as much as 90% of their revenue from federal funding.
Bank of America Corporation is a bank holding company, and a financial holding company. The Company is a financial institution, serving individual consumers, small and middle market businesses, large corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. Through its banking subsidiaries (the Banks) and various nonbanking subsidiaries throughout the United States and in selected international markets, it provides a range of banking and nonbanking financial services and products through six business segments: Deposits, Global Card Services, Home Loans & Insurance, Global Banking, Global Markets, Global Wealth & Investment Management (GWIM), with the remaining operations recorded in All Other. On January 1, 2009, the Company completed the acquisition of Merrill Lynch.
Shares of Bank of America Corp (NYSE: BAC) traded down 1.25% hitting $13.38 during mid-day trading on Monday.
