Nomura Upgrades New Oriental's Profit Forecast, Reiterates Buy Rating

Summary

Daiwa has raised New Oriental’s target price to 49 yuan, citing stable business development and significant potential for increased shareholder returns. Starting from fiscal year 2026, New Oriental plans to return no less than 50% of the previous fiscal year’s net profit to shareholders in the form of dividends or share buybacks. Daiwa expects the shareholder return ratio to exceed 50% and has raised its revenue and earnings per share forecasts for fiscal years 2026 to 2028, reaffirming its ‘buy’ rating.AASTOCKS

Impact Analysis

So basically, Daiwa is signaling strong confidence in New Oriental’s future performance. The key here is the commitment to return at least 50% of net profit to shareholders starting in FY2026, which could be a significant catalyst for the stock. This move suggests management is confident in their ability to generate consistent profits and is willing to reward shareholders, which is always a positive sign. The market might be underestimating the impact of these shareholder returns, especially if the ratio exceeds 50% as Daiwa predicts. The reaffirmation of the ‘buy’ rating and the raised target price to 49 yuan further underscores this confidence. Watch for potential upward revisions in earnings estimates from other analysts, which could drive the stock higher.AASTOCKS