Connecticut based hedge fund Coliseum Capital revealed this week that it bought 216,719 Universal Technical Institute (US:UTI) shares at an average of $6.24 per share or a total of $1.35 million.
The transaction follows Universal’s strong fourth quarter earnings update and related share volatility. The average price was a roughly 20% discount to UTI’s price at the beginning of the year and significantly below its 52 week high above $11.
UTI is a workforce educational training provider for the transportation and health care industries and operates 16 campuses in 9 states. The company sports a $220 million market capitalization and trades at 17 times trailing 12 month earnings.
Coliseum Capital, led by Co-founder Chris Shackelton, has an average trade profitability of 22.44%, according to Fintel’s insider trading tracker for the hedge fund.
The company said its latest quarterly revenues grew 13.5% to $110.6 million versus analysts’ $111 million forecast. EBITDA declined over the year from to $14.0 million from $18.3 million but was ahead of the $12.5 million consensus forecast.
Adjusted net income dropped to $8.0 million from $13.9 million in Q4 of 2021. The company’s three cents share net profit topped one cent a share analyst consensus.
Total new student starts were flat at around 5,965, and end of the period, full-time active students rose 5% over the year to 14,380.In 2023, management expects new student starts will double to 22,000-23,500, including 10 months of contribution from its Concorde acquisition and the ramp-up of new UTI campuses.
UTI expects 2023 revenue between $595 to $610 million with adjusted EBITDA of $58 to $62 million and adjusted net income between $14 to $18 million.
Analyst Raj Sharma from B Riley Securities is ‘buy’ rated on the stock with a $14 price target based on a strong business model, growth prospects and discount valuation.
Sharma expects UTI to grow sales and earnings by more than 20% per year for the next few years. Fintel’s forecast analysis for UTI highlights that the average consensus price target for the stock in the street is $12.75, suggesting there is 100% capital upside in the stock in the medium term.
In other news, Coliseum Capital is currently working on a $4.35 a share hostile bid for bedding manufacturer Purple Innovation (US:PRPL), where fellow investors AWH Capital last week urged the company to reject the offer as too low.
This article originally appeared on Fintel
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