), one of the largest providers of higher-education in North
America, acquired Faculdade do Vale do Ipojuca ("FAVIP"). FAVIP,
which is based in Fortaleza, Ceará, Brazil will form a part of
Based in the state of Pernambuco, FAVIP offers more than 30
undergraduate and graduate programs to about 5,000 students at two
campuses located in Caruaru. The institution is well known for its
programs in law, business, psychology and nutrition.
Following its integration into DeVry Brasil, FAVIP will benefit
from the academic expertise of DeVry Brasil, its virtual libraries
and research databases, infrastructural and technological
investments, international exchange programs and projects and
English language courses at a lower cost. FAVIP is one of the
fastest growing educational institutions and will be able to
capitalize on the opportunities that will come with this
On the other hand, for DeVry, this is an opportunity to increase
its share of the educational market in Northeast Brazil. With a GDP
of 5.1% the country is growing at a fast pace and soon there will
be a huge demand for skilled labor.
There is a large gap between the skills required by the industry
and those of college students. As such, with increasing middle
class population, there will be a growing demand for
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Private educational institutes like DeVry can play a role in
bridging this gap by providing career-oriented educational
programs. Previously, in February 2012, DeVry acquired the
Faculdade Boa Viagem to expand its presence in Northeastern Brazil.
Given the fact that DeVry Brasil has been seeing strong growth in
enrollments, when the rest of the company is witnessing declines,
this acquisition may be considered a wise move.
The persistent decline in enrollment is mainly due to the weak
macroeconomic environment and subsequent decline in student demand
(due to the hesitancy over taking a loan). Further, modifications
made to the business to comply with new regulations have also been
hurting enrollment growth.
Other than enrollment declines, DeVry had a tough time due to heavy
investments in scholarships to support students who are facing the
brunt of recent cuts to the Pell Grant program.
DeVry Inc. carries a Zacks #5 Rank in the near term (Strong Sell
rating). We currently have an Underperform recommendation on DeVry
Inc. We believe that though management is trying to boost its
business and control costs, it might take time for these
initiatives to deliver the desired results.