Deutsche Bank trimmed its price target on New Oriental Education (NYSE: EDU) to $115.00 (from $116.00) but maintained a Buy rating following Q2 results.

Analyst Tallan Zhou notes Q2 is normally a low season and does not really contribute to profit. That said, the market may still feel disappointed to some extent, given 2QFY17 saw both top-line growth and margin expansion. "We mentioned in our initiation report that the dilemma of gaining market share (robust top-line growth) and an improvement in margins would always exist during the company's expansion stage (penetration)," Zhou commented. "In the past two quarters, EDU added 96 learning centers and it added a further 41 new schools and learning centers in 2Q."

Positives from the result are: 1) the margin decline has been narrowed to 150 bps from 390 bps in Q1; 2) the top line beat the consensus estimate; 3) deferred revenue was 48.7% yoy; and 4) the guidance is for accelerated top-line growth of 35-38% yoy in the next quarter.