Oppenheimer analyst Ella Ji lowered its price target on Outperform-rated China Distance Education (NYSE: DL) to $20.00 (from $29.00), saying policy change brings near-term growth headwinds.

Ji commented, "F2Q15 results were roughly in line. However, F3Q guidance falls below our original estimate due to a tough comp, change of the timing of the tests, as well as softer than expected enrollments on E&C and Tax Agent exams due to regulation changes. FY guidance also lowered by ~7%. DL plans to focus on some new initiatives, such as Teacher's Certificate test and College cooperation program, launched in May, which leads to higher spending level. Mgmt also discussed continuing migration to mobile which reps 1/4 daily traffic and has longer daily time spent and higher user engagement. We lower our ests and price target to $20 from $29."

The firm is lowering F3Q15E rev/EPS from 33.0M/$0.24 to $28M/$0.04, given the lower than expected guidance and margin pressure. They also adjust down FY15E rev/GAAP EPS by 5%/26% to $118M/$0.61.

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Shares of China Distance Education closed at $18.71 yesterday.