BMO lifts Grand Canyon Education target to $208 on enrollment growth

Wednesday saw BMO Capital Markets adjust their outlook on Grand Canyon Education (NASDAQ:LOPE) shares, raising the price target to $208 from $191, while continuing to endorse the stock with an Outperform rating. Currently trading at $185.45 and near its 52-week high of $192.18, the company has demonstrated strong momentum with a 32.7% return over the past year. The revision follows Grand Canyon Education’s report of a robust adjusted earnings per share (EPS) that surpassed both consensus and the company’s own forecasts.

Grand Canyon Education’s first quarter of 2025 showcased new enrollment figures that exceeded expectations. The $5.27 billion market cap company, which boasts a healthy current ratio of 3.78 and impressive return on equity of 30%, continues to demonstrate solid financial performance. The online segment of Grand Canyon University (GCU Online) saw an increase in the low teens percentage-wise, while the hybrid programs experienced a low mid-teens percentage rise. Despite a year-over-year decline in on-campus (GCU Ground) enrollment due to previous issues with the Free Application for Federal Student Aid (FAFSA), the company provided an optimistic outlook for fall enrollments.

In response to the encouraging enrollment trends, Grand Canyon Education’s management has upgraded the annual guidance across most metrics. BMO Capital’s analyst cited these improved expectations as the primary reason for the increase in their price target and estimates for the company.

The analyst’s commentary highlighted the company’s solid performance and the resulting upward adjustment in financial estimates. "LOPE delivered a solid adjusted EPS beat to consensus and guidance. 1Q25 new enrollment trends were better than expected with GCU Online up low teens and Hybrid up low mid-teens. While GCU Ground enrollment fell y/y (prior FAFSA issues), commentary on fall enrollment was positive. Given the better expected enrollment trends, management raised annual guidance on most metrics. We raise our estimates and target price on the solid results."

Investors and stakeholders of Grand Canyon Education can look to the company’s recent performance and the analyst’s upgraded price target as indicators of its current financial health and future potential. According to InvestingPro analysis, the company maintains a "GREAT" financial health score of 3.31, though it currently trades at a premium to its Fair Value. The positive adjustments reflect the company’s ability to navigate challenges and capitalize on growth opportunities within the education sector. For deeper insights into LOPE’s valuation and 12 additional exclusive ProTips, explore the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Grand Canyon Education reported strong financial results for the first quarter of 2025, with earnings per share (EPS) of $2.57, surpassing analyst expectations of $2.49. The company also exceeded revenue forecasts, achieving $289.3 million compared to the projected $287.18 million. This performance marks a 5.3% year-over-year increase in revenue. Analysts have noted the company’s strategic focus on expanding program offerings, which has contributed to a 7.9% growth in online enrollments and a 16.5% growth in hybrid enrollments. Despite challenges in the higher education sector, Grand Canyon Education continues to invest in partner initiatives and workforce development programs. The company has also been expanding its hybrid and online program offerings, introducing new programs in collaboration with partner institutions. CEO Brian Mueller emphasized the company’s focus on building capabilities rather than pursuing mergers and acquisitions. Grand Canyon Education projects continued growth in new student starts and online enrollment, although a slight margin decline is anticipated in the second quarter.

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