17 Education & Technology downgraded to Underperform from Buy at BofA

2021-08-03

$New Oriental Education & Technology(EDU)$ BofA analyst Lucy Yu downgraded 17 Education & Technology (YQ) to Underperform from Buy after the government released the "double-reduction" policy to reduce the burden of homework and after-school tutoring on students grade 1-9 which was tougher than expected. If only including K9 revenue from weekdays of school semesters, Yu estimates New Oriental (EDU), TAL Education (TAL) and 17 Education will see 40%, 65%, and 70%, respectively, lower revenue, though companies could increase utilization during weekdays to offset some pressure. Yu believes the policy could be implemented strictly and could last over the long term, creating a "material, adverse impact" on the K12 after-school tutoring industry in the country, the analyst added.$New Oriental Education & Technology(EDU)$

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