New Oriental Education & Technology Group Inc. Upgraded to ‘Buy’ by Citi Analysts
Date: June 27, 2025
New Oriental Education & Technology Group Inc. (NYSE: EDU) has been recognized in a recent analyst report as one of the 10 Most Undervalued Foreign Stocks to Buy. In a significant move, Citi upgraded its rating on the company from ‘Neutral’ to ‘Buy’ with a revised price target of $50, down from the previous target of $77. Analysts attribute this upgrade to New Oriental’s robust domestic growth potential.
Citi forecasts substantial upside for New Oriental, particularly in its high-margin segments: K9 and Senior High. These areas are experiencing strong growth rates of approximately 35% and 11% annually and are projected to comprise 45% to 55% of the company’s revenue by fiscal year 2026. Additionally, effective cost management strategies, such as rental reductions and controlled hiring, are contributing to structural margin expansions. Analysts note that shifting just 1% of revenue towards domestic operations could result in an 8-10 basis-point increase in margins.
With a low forward P/E ratio and a solid net cash reserve of $4.7 billion, New Oriental presents a favorable opportunity for capital gains, according to Citi’s analysis. The company, based in China, specializes in test preparation, tutoring, online learning, and overseas study consulting, solidifying its place as a valuable asset in educational services.
While New Oriental is deemed a promising investment, analysts caution that certain AI stocks may offer greater upside and reduced risk, highlighting a competitive investment landscape.
Investors looking for undervalued opportunities may want to consider the insights regarding New Oriental, but should also explore alternatives in the AI sector for potentially higher returns.
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