Key Takeaways:
New Oriental Education & Technology Group (NYSE: EDU) reported a 20 percent year-over-year revenue increase for the third quarter of fiscal 2026, prompting an optimistic forecast for the fourth quarter and a price target upgrade from CMB International.
“The results reflect the resilience of its core education business and improved efficiency,” CMBI analysts said, maintaining a Buy rating on the stock. The bank raised its non-GAAP operating profit forecasts for New Oriental for fiscal years 2026 through 2028 by 5 to 14 percent.
The Beijing-based company’s net revenue reached $1.42 billion, beating market consensus by 4 percent, which it attributed to solid growth in new education initiatives and favorable foreign exchange rates. For the fourth quarter, management expects revenue to grow between 15 and 18 percent year-over-year to a range of $1.43 billion to $1.47 billion, ahead of the consensus estimate of $1.43 billion.
The strong performance and outlook signal a steady recovery and strategic pivot for China’s private education providers. The sector has been diversifying its offerings since a regulatory overhaul in 2021. Competitor TAL Education Group, for example, has also seen growth through expanding its offline learning centers and developing its learning devices segment.
CMBI raised its price target for New Oriental’s U.S.-listed shares to $82 from $78, citing momentum across the company’s diversified business lines. The bank projects that for the fourth quarter, revenue from new education businesses will climb 20 percent year-over-year.
Growth is also expected from high school tutoring, which is forecast to increase by 17 percent, and the domestic adult test preparation segment, projected to grow by 25 percent. The overseas-related business is expected to see a modest 1 percent increase, according to the CMBI report. Management expressed optimism about further margin improvements through the rest of fiscal 2026 and into 2027.
The guidance suggests management is confident that demand for its educational services remains robust and that its efficiency measures are taking hold. The focus on new initiatives and expansion in tutoring and test prep appears to be paying off, allowing the company to navigate a competitive market and capture new growth opportunities. Investors will watch the upcoming fourth-quarter results to see if the margin expansion materializes as management anticipates.
This article is for informational purposes only and does not constitute investment advice.
