Jeffrey Silber, Managing Director and Senior Analyst at BMO Capital Markets Corp., says some education companies are tying to expand beyond their core areas in an effort to deal with a challenging macro environment. He says DeVry Education Group Inc (DV) has been focusing on medical and health care.
“So they have a veterinary school and a couple of medical schools in the Caribbean; they have some nursing schools in the United States that for the most part have not been affected by all the [challenging macro environment],” Silber says. “So if you see other companies trying to reach out beyond their core business, I think that would be a good thing.”
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As bad as business has been for education companies, Silber says they are still able to generate good cash flow. As a result, he says the only reason they would need debt is to make an acquisition or to go private.
“But for the most part these companies still have decent balance sheets, and that’s why they’ve been able to survive what’s been going on in the past few years,” Silber says. “Hopefully that should continue.”
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