Bank of America Securities analyst Lucy Yu reiterated a Buy rating on New Oriental Education Tech today and set a price target of $58.20.
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Lucy Yu has given her Buy rating due to a combination of factors that suggest a positive outlook for New Oriental Education Tech. One of the key reasons is the potential for increased shareholder returns, as the company has a strong cash position and robust free cash flow generation capabilities. This financial strength allows for the possibility of increasing the current return rate, which could lead to a higher yield for investors.
Additionally, Lucy Yu notes that the company’s overseas business performance is expected to be better than initially feared, with certain segments potentially offsetting declines in the US and UK markets. Furthermore, the anticipated reacceleration of K9 revenue growth and the company’s ability to maintain margin resiliency through cost control and improved margins in certain sectors contribute to the positive rating. These factors, combined with the expectation of non-GAAP operating margin expansion, support the Buy recommendation for EDU.