BofA raises New Oriental Education stock price target on revenue beat

EDU is a quality-upside story, but the market is likely underpricing the optionality embedded in the buyback cadence. With a sizable authorization still ahead of it, repurchases can keep absorbing liquidity on pullbacks and effectively cap downside if growth merely stays in the mid-teens; that matters more here than the headline valuation multiple. The bigger second-order effect is that management is converting episodic operating beats into a more durable per-share compounding narrative, which should compress the discount rate investors apply to China education exposure.

The key risk is not execution this quarter, but whether the market starts treating the revenue acceleration as cyclical rather than structural. If test-prep demand normalizes or margin expansion stalls once restructuring costs fade, the stock can quickly revert to being judged on policy/regulatory overhang rather than fundamentals. That argues for respecting the next 1-2 quarters as the critical window: strong prints can force multiple expansion, but any guide-down would likely trigger a fast de-rating because the current setup relies on credibility around full-year growth.

Contrarian take: consensus may be over-focusing on the absolute valuation and underestimating the mix of buybacks plus EPS compounding. At ~13x forward earnings, the stock does not need heroic growth to work; it only needs the company to keep executing above its own guide while reducing share count. The risk/reward is better than the market seems to think because the downside is partially supported by capital returns, while the upside comes from both estimate revisions and multiple expansion if investors reclassify EDU from a turnaround to a self-funding compounder.