Brean Sees A Clear Roadmap To Growth For TAL Education Group

Brean Capital initiated coverage of TAL Education Group (ADR) XRS with a Buy rating and $72 price target, describing the company as a leading K-12 after-school tutoring service provider in China with a premium brand recognition and quality product offerings.

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The analysts believe the company is still in an expansion stage with a clear roadmap to drive continued top-line growth mainly driven by the following:

  • Fast capacity and geographic expansion
  • Broadening product offerings
  • Investment in O2O and new teaching initiatives

Related Link: CLSA Downgrades TAL Education Group To Underperform

"While the continued investment and expansion could weigh on margins in the near term, it should help the company to further strengthen its market positioning and to drive sustainable growth in the long term with continued market share gains in a fast growing and highly fragmented industry," wrote Brean Capital.

The $72 price target is based on 30x our CY2017 non-GAAP EPS of $2.21 and net cash per share of $5.39. The analysts expect the company to deliver sustainable earnings growth of more than 30 percent in the mid/long term.

Of note, CLSA Downgraded TAL Education Group To Underperform on Wednesday.

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