Key Takeaways:
CMSI raised its price target on New Oriental Education & Technology Group Inc. (NYSE: EDU) to $79 from $76, citing strong quarterly results and an improved outlook that points to sustained operational momentum.
"We are sharpening our focus on our core education business, prioritizing enhancements of teaching standards and product quality," Michael Yu, New Oriental's Executive Chairman, said in the earnings release. "Simultaneously, we will optimize our cost structure and operational efficiency to drive high-quality, efficient, and sustainable growth."
The analyst firm reiterated its Overweight rating on the stock. The move came after New Oriental reported third-quarter fiscal 2026 net revenues of $1.42 billion, a 19.8% year-over-year increase that beat consensus estimates. Non-GAAP operating margin for the quarter expanded by 230 basis points to 14.3%, reflecting improved efficiency.
CMSI’s new target suggests the firm sees significant value in the education company, implying roughly 44% upside from its closing price on April 22. The bullish revision is supported by New Oriental's active shareholder return program and management's decision to lift its full-year 2026 revenue growth forecast to a range of 13% to 14%, up from a prior estimate of 5% to 10%.
New Oriental’s management now expects total net revenues for the fourth quarter to be between $1.43 billion and $1.47 billion, representing a year-over-year increase of 15% to 18%. This confidence is backed by a solid balance sheet, with the company holding $1.78 billion in cash and equivalents as of February 28, 2026.
The company continues to reward shareholders, approving the second installment of its fiscal 2026 dividend at $0.60 per ADS. As part of a previously announced $300 million share repurchase program, New Oriental has already bought back approximately 3.3 million ADSs for $184.3 million as of April 21, signaling management’s belief in the stock’s value.
The company’s growth was driven by its new educational business initiatives, which saw revenue climb 23.3% year-over-year. Non-academic tutoring courses attracted approximately 458,000 student enrollments during the quarter, while its intelligent learning systems were adopted by 367,000 active paid users. The results stand out in the competitive Chinese education market, which includes peers like TAL Education Group (NYSE: TAL). The company's e-commerce platform, East Buy, also contributed to the strong performance by expanding its live-streaming presence.
The upgraded forecast from CMSI signals growing confidence that New Oriental's strategic initiatives are translating into durable financial gains. Investors will watch for the company's fourth-quarter results in mid-2026 to see if the revenue acceleration and margin expansion can be sustained.
This article is for informational purposes only and does not constitute investment advice.
