EDU: Core Business Resilience And Expanding Margins Will Drive Renewed Earnings Compounding

Analysts have raised their price target for New Oriental Education & Technology Group from approximately $58.31 to $63.77. They highlight accelerated revenue growth, improved margins, and resilience in core business units as primary drivers for the upward revision.

Analyst Commentary

Recent research notes from major Wall Street firms reflect a nuanced but largely optimistic outlook on New Oriental Education & Technology Group, with several bullish analysts raising their price targets and highlighting the company’s operational strengths. However, some cautious views have also emerged in light of persistent sector challenges.

Bullish Takeaways

• Bullish analysts have lifted price targets in response to accelerated revenue growth, particularly in the most recent fiscal quarter.
• Analysts note that margin expansion is a key factor driving improved profitability and renewed confidence in the company’s earnings potential.
• Core domestic business units, especially those serving kindergarten through high school, have demonstrated resilience, helping offset declines in other areas.
• There is high visibility into earnings growth, with expectations that New Oriental is back to compounding earnings after a period of volatility.

Bearish Takeaways

• Bearish analysts note ongoing structural declines in the overseas study segment, which could introduce further headwinds.
• Concerns persist around future revenue stability from international markets, even as domestic segments remain robust.
• While margin expansion is positive, analysts observe that it is partly being driven by cost controls rather than sustained topline acceleration across all business lines.

What's in the News

• The Board of Directors authorized a new share buyback plan on October 28, 2025. (Board Announcement)
• New Oriental Education & Technology Group announced a share repurchase program of up to $300 million. The program will be conducted over 12 months and funded by the company's existing cash. (Company Statement)
• The company provided earnings guidance for the second quarter of fiscal 2026, projecting net revenues between $1,132.1 million and $1,163.3 million, representing a 9% to 12% increase year over year. Full fiscal year guidance was confirmed at $5,145.3 million to $5,390.3 million in revenues, up 5% to 10% year over year. (Earnings Guidance)
• Between March 1, 2025 and April 30, 2025, the company repurchased 2,157,320 shares for $97.87 million. This completed the repurchase of 15,111,753 shares for $741.77 million under its existing buyback program. (Buyback Update)
• East Buy Holding Limited renewed its framework agreement with New Oriental. The agreement covers product transactions and livestreaming e-commerce collaboration through May 31, 2026. (Corporate Announcement)

Valuation Changes

• Consensus Analyst Price Target has increased from $58.31 to $63.77, reflecting a moderate upward revision in expectations.
• Discount Rate has decreased slightly from 7.70% to 7.61%, indicating a marginally lower perceived risk.
• Revenue Growth projection has edged down from 9.70% to 9.60%, suggesting a small reduction in anticipated growth rates.
• Net Profit Margin estimate has dipped from 9.88% to 9.73%, pointing to a minor downward adjustment in profitability expectations.
• Future P/E ratio forecast has risen from 16.86x to 18.16x, which implies a higher valuation multiple based on forward earnings.