In a second set back for local buyout group BGH (See the Healthscope story), education pioneer, Navitas has rejected the $2 billion offer from the group which includes founder and current director, Rodney Jones.
A bit of a relief rally in shares of adult education provider Navitas yesterday as the company revealed the widely forecast loss after warning of higher restructuring costs and write downs related to the closure of two US colleges and an Australian division.
UBS notes enrolments have stabilised but remain mixed. Canada is the main driver of North American growth but universities are close to full capacity. EU growth is underpinned by the favourable immigration environment.
Management has updated on the medium-term growth outlook. With earnings re-based, the company appears confident an inflection point has been reached. Macquarie considers the new targets lofty, implying operating earnings of $165m in FY20, forecast to increase to around $200m in FY21 and over $250m by FY23.
Navitas’ guidance on FY18 university partnership enrolments is weaker than the broker had forecast, led by fewer A&NZ enrolments — half of earnings — offsetting greater US/UK enrolments — 38% of earnings. The broker nevertheless sees FY18 as an earnings rebase year under new management.