New Oriental (EDU, Financial) experienced a 1.2% decline in pre-market trading, with shares priced at $62.7. According to a research report from Shenwan Hongyuan, New Oriental's revenue for the second quarter of fiscal year 2025 is projected to reach $993 million, marking a 14.2% increase compared to the previous year. However, the Non-GAAP net profit attributable to shareholders is expected to show a modest growth of 4.7% to $53 million.
The report highlights that the company's profit growth is being hampered by a decline in e-commerce sales. As the proportion of e-commerce business continues to decrease, its impact on overall revenue and profit is expected to diminish significantly. The focus is shifting back to the core education business, which is experiencing sustained high growth. This growth, coupled with accelerated capacity expansion, is anticipated to drive a recovery in the company's valuation.
The research firm maintains a "buy" rating for New Oriental, setting a target price of $109.5, indicating confidence in the company's long-term prospects despite current challenges.
