News Flash: Analysts Just Made A Sizeable Upgrade To Their New Oriental Education & Technology Group Inc. (NYSE:EDU) Forecasts

New Oriental Education & Technology Group Inc. (NYSE:EDU) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. New Oriental Education & Technology Group has also found favour with investors, with the stock up a notable 13% to US$51.51 over the past week. Could this upgrade be enough to drive the stock even higher?

After the upgrade, the 15 analysts covering New Oriental Education & Technology Group are now predicting revenues of US$3.8b in 2024. If met, this would reflect a sizeable 27% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 62% to US$1.69. Before this latest update, the analysts had been forecasting revenues of US$3.4b and earnings per share (EPS) of US$1.73 in 2024. Although sales sentiment looks to be improving, the analysts have made a small dip in per-share earnings estimates, showing a decline in sentiment this week.

View our latest analysis for New Oriental Education & Technology Group

Analysts also upgraded New Oriental Education & Technology Group's price target 15% to US$59.13, implying that the higher sales are expected to generate enough value to offset the forecast decline in earnings. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values New Oriental Education & Technology Group at US$85.00 per share, while the most bearish prices it at US$36.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting New Oriental Education & Technology Group's growth to accelerate, with the forecast 27% annualised growth to the end of 2024 ranking favourably alongside historical growth of 1.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.3% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect New Oriental Education & Technology Group to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for New Oriental Education & Technology Group. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at New Oriental Education & Technology Group.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple New Oriental Education & Technology Group analysts - going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.