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The company said the recent $2,000 per year Title IV loan limit increase would cut its exposure to the loans by half. Lehman Brothers said this would reduce the company's potential for bad debt expense.
Lehman upped its price target on ITT to $90 from $76 and raised its 2008 earnings outlook to $4.26 a share from $4.18 a share. The mean estimate of analysts polled by Thomson Reuters is for 2008 earnings of $4.43 a share.
Lehman Brothers affirmed its overweight rating on the company and recommended that "risk-tolerant investors" buy the stock.
William Blair upgraded the company to outperform and said that momentum in relation to student lending, enrollments, and cost controls were all moving in the company's favor.
"We realize we are late to the party, but we believe our recent caution was warranted and more importantly believe the party has the potential to keep the neighbors up for awhile longer," the firm wrote.
ThinkPanmure upped its price target on ITT to $102 from $80, saying the news reduced concerns about the company's private lending to students. "We now believe the company will be required to do less lending to students than we previously thought, and we continue to believe that the market for issuing and securitizing riskier student loans will likely have improved in a year's time," it said.
Shares of ITT rose 3% to $87.02 in morning trading. The stock is down about 25% over the past 52 weeks. Ryan Vlastelica rv/vj
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