BoA Securities raised target price of New Oriental Education by 94%, with Buy rating

 

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BoA Securities raised the target price for New Oriental Education by nearly 94% to HK$28.5 from HK$14.7, and raised the rating for the company to Buy from Neutral. The stock is trading 1.4% higher at HK$22 as of 2:37 pm on Monday, local time.

New Oriental’s earnings may have bottomed in the fourth quarter ended in May and its revenue and profits are expected to recover in the first quarter of fiscal year 2023, the broker said in a note.

The firm’s several business lines are picking up, the business for overseas test preparation, consulting and domestic test preparation have all hit the bottom and its new businesses are also growing rapidly, with student retention improving, the broker said, adding the online education arm Koolearn Technology has achieved notable development and is expected to become one of main growth drivers.

In addition to the recovery in revenue, BoA Securities also expect New Oriental’s profitability to improve, saying that its operating loss rate narrowed to 15% in the fourth quarter and net profit is expected in the fiscal year 2023. The bank raised the forecast of New Oriental’s 2023 earnings-per-share to $0.97 and 2024 fiscal year EPS to $1.1.