Overview#
BofA Securities has raised its price target for New Oriental Education & Technology Group (NYSE:EDU) from $71.30 to $73.20 while maintaining a Buy rating on the stock. This change comes after the company reported impressive revenue growth in its latest quarter.
Strong Revenue Performance#
In the February quarter, New Oriental Education achieved a 19% increase in revenue compared to the same period last year, surpassing the company's guidance of 11% to 14%. This growth was primarily driven by its test preparation and educational business segments. Additionally, the company's non-GAAP operating margin improved by 2.3 percentage points, exceeding the expected 1 percentage point.
Share Buybacks and Future Guidance#
As of April 21, New Oriental has invested $181 million in share buybacks, moving towards a total authorization of $300 million, which is set to be completed by October 2026. The company has also adjusted its revenue growth guidance for the upcoming May quarter to between 15% and 18%, leading to an overall increase in its full-year revenue forecast from 5% to 10% to a new range of 13% to 14%.
Fiscal Estimates and Market Reaction#
Despite the positive revenue outlook, BofA Securities has kept its fiscal 2026 estimates unchanged, balancing higher revenue expectations with lower margin forecasts due to one-time restructuring costs. The firm has, however, increased its fiscal 2027 estimates by 6%. Currently, the stock is trading at a forward price-to-earnings ratio of 13, with a 4% shareholder-return yield and an anticipated 23% compound annual growth rate in earnings per share from fiscal 2026 to 2028.
In a recent earnings report, New Oriental Education posted earnings per share of $0.95, beating the expected $0.84, and revenue of $1.42 billion, which also exceeded projections. Despite these strong results, the stock saw a decline in pre-market trading, attributed to broader market concerns. Investors are keen to see how the company will manage potential challenges in the near future.