- The stock price of New Oriental Education & Technology Group Inc. (NYSE: EDU) fell by over 7% during intraday trading this morning. This is why it happened.
The stock price of New Oriental Education & Technology Group Inc. (NYSE: EDU) fell by over 7% during intraday trading this morning. Investors are responding negatively to a bearish research report.
Morgan Stanley downgraded New Oriental Education & Technology Group and TAL Education Group along with China-based after-school tutoring companies as a whole due to stricter regulations from the government. Morgan Stanley analyst Sheng Zhong believes there is a 50% that tutoring hours are going to be partially cut.
As part of a bear case, Morgan Stanley believes there is a 45% probability that K9 after-school tutoring companies are going to struggle to keep operating without tutoring on weekends, the summer, and winter holidays. Currently, K9 and K12 generate about 55% and 80% of EDU’s revenue.
Morgan Stanley downgraded the rating of EDU from “overweight” to “equal weight” and a price target decrease from $20 to $8.60.
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