UPDATE: HSBC Downgrades New Oriental Education (EDU) to Hold
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HSBC analyst Charlotte Wei downgraded New Oriental Education (NYSE: EDU) from Buy to Hold with a price target of $9.20 (from $18.70).
The analyst comments "EDU: We factor in Scenario 3, cut our FY22e/23e revenue and earnings by between 41% and 96%, lower our DCF TPs for TAL to USD25 (from USD83) and EDU to USD9.20 (from USD18.70), downgrade both to Hold from Buy. However, the longer-term outlook may not be as bad. The likely hard-hitting impact from the potential regulations could create issues such as driving tutoring activities underground and job losses, especially for young graduates. We believe this could result in possible regulatory adjustments in the medium term, so hence we have factored in higher growth assumptions between FY24-30."
Shares of New Oriental Education closed at $7.63 yesterday.
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