UPDATE: Goldman Sachs Upgrades Xueda Education Group to Neutral, Raises PT on Positive Outlook

In a report published Wednesday, Goldman Sachs analyst Fei Fang upgraded the rating on Xueda Education Group XUE from Sell to Neutral, and raised the price target from $3.00 to $3.80. In the report, Goldman Sachs noted, “We upgrade Xueda to Neutral from Sell. In the most recent quarter, Xueda delivered 3.5pp yoy gross margin expansion, achieving one of the fastest efficiency improvements in its reporting history, which indicates rising utilization across the learning center network. This pushes up the operating margin close to pre-disruption levels. Combined with positive 3Q guidance and reasonable valuation, we believe there may be limited share price downside. Since we added the stock to our Sell list on December 11, 2012, it has risen 47% vs. MSCI China's -5%, mainly due to the company's improving margin profile ytd, in our view. Over 12 months, it has risen 38% vs. MSCI China's +7%.” Xueda Education Group closed on Tuesday at $4.00.