Gaotu(US:GOTU) First Shanghai Securities·2025-12-15 08:21Investment Rating - The report maintains a "Buy" rating for the company with a target price of $4.20, representing a potential upside of 77.1% from the current price of $2.38 [6]. Core Insights - The company has demonstrated strong revenue growth, with a year-on-year increase of 30.7% to RMB 1.58 billion for FY25Q3, surpassing previous guidance [3]. - Non-GAAP operating loss significantly narrowed to RMB 169 million from RMB 476 million year-on-year, indicating improved operational efficiency [3]. - The company expects revenue growth of 17.2%-18.7% for FY25Q4, with projected revenue between RMB 1.628 billion and RMB 1.648 billion [5]. Revenue and Business Performance - The education segment remains robust, contributing approximately 80% of total revenue, with non-academic training and traditional K12 services growing over 35% year-on-year [4]. - Non-academic training revenue surged by over 60% year-on-year, with expectations of achieving double-digit profit margins for the full year [4]. - Adult and college student business segments also showed strong performance, with college student revenue increasing by 50% year-on-year [4]. Financial Outlook - For FY25, the company anticipates a total non-GAAP operating loss of RMB 510 million, reflecting adjustments in recruitment and business strategies [5]. - The company projects a 15% year-on-year revenue growth for FY26, indicating a positive long-term outlook [5]. Financial Summary - The company reported cash and cash equivalents of RMB 3.04 billion as of FY25Q3, with no interest-bearing debt [3]. - The financial forecast shows a gradual improvement in profitability, with non-GAAP operating profit margins expected to turn positive by FY26 [8].