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Citi upgrades TAL International stock to buy on robust revenue, earnings outlook

EditorEmilio Ghigini
Published 04/26/2024, 07:39 AM

On Friday, TAL International (NYSE:TAL) stock experienced a significant shift in market perspective as Citi upgraded the rating from Sell to Buy, setting a new price target of $21.30. This adjustment represents a substantial increase from the previous target of $2.90.

The upgrade by Citi comes on the heels of a comprehensive review of TAL International's financial outlook. The firm now anticipates robust revenue and earnings growth for TAL, projecting increases of 35%, 33%, and 30% for fiscal years 2025, 2026, and 2027, respectively. Similarly, earnings growth is expected to surge by 130%, 66%, and 28% for the same periods.

Citi's optimistic assessment is rooted in several key factors. Firstly, TAL's successful expansion into offline markets and the rising demand for its learning devices have been notable. Additionally, Citi's proprietary research suggests that the learning device segment's business model is proving to be profitable.

Another contributing factor to the positive outlook is TAL International's strong brand presence and dominance in the market. Despite the learning device segment currently being unprofitable, Citi forecasts that profitability will improve as the business expands.

The strategic emphasis TAL International places on both traditional learning services and the development of innovative learning devices is expected to position the company for sustained growth. Within the K12 (NYSE:LRN) education sector, Citi has identified TAL as one of the top picks, following EDU and ahead of Gaotu.

InvestingPro Insights

Following Citi's optimistic upgrade of TAL International, recent metrics from InvestingPro provide additional context to the company's financial health and market performance. Notably, TAL holds more cash than debt, indicating a strong balance sheet, and analysts have revised their earnings upwards for the upcoming period, reflecting potential confidence in the company's growth trajectory. Moreover, TAL has demonstrated impressive gross profit margins at 54.09% over the last twelve months as of Q4 2024, suggesting efficient cost management and a strong pricing strategy.

The company's market capitalization stands at $8.52 billion, while the revenue growth has been remarkable, with a surge of 46.15% over the last twelve months as of Q4 2024. This aligns with Citi's projections for continued revenue expansion. In terms of market performance, TAL has experienced significant returns, with a 123.24% increase over the last year, which may be indicative of market confidence.

Investors looking to delve deeper into TAL International's performance can explore additional InvestingPro Tips, which include insights such as the company's liquidity position and profitability predictions. For those interested, there are 10 more InvestingPro Tips available, which could further inform investment decisions. To access these tips and more detailed analytics, visit https://www.investing.com/pro/TAL and use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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