HSBC Upgrades New Oriental Education & Technology Group to Buy Following Strong Q2 FY2026 Results

Core Viewpoint - New Oriental Education & Technology Group Inc. has received an upgrade from HSBC following strong Q2 FY2026 results, indicating positive market sentiment and growth potential for the company [1][2]. Financial Performance - The company reported net revenue of approximately $1.19 billion for Q2 FY2026, exceeding consensus estimates by $28.62 million and reflecting a year-over-year growth of 14.7% [2]. - Adjusted earnings per share were around $0.45, surpassing estimates by $0.11 per share [2]. - Net profit reached $45.5 million, marking a significant increase of 42.3% compared to the previous year [2]. Business Growth Drivers - Growth in overseas test preparation contributed to a 4.1% year-over-year increase, while the domestic test preparation business grew nearly 12.8% year-over-year [3]. - New educational business initiatives experienced a growth rate of 21.6% from the previous year [3]. - The company's non-academic tutoring courses attracted nearly 1.06 million students across 50 cities in Q2 [3]. - The intelligent learning system and devices recorded 352,000 active paid users during the quarter [3]. Strategic Initiatives - The CEO highlighted a cautious capacity expansion strategy, balancing revenue growth with operational efficiency [2]. - The company is enhancing its OMO (online-merge-offline) teaching system and investing in AI integration across its education ecosystem [2].