Please ensure Javascript is enabled for purposes of website accessibility

Why GSX Techedu Shares Gained on Tuesday

By Jon Quast - Jan 19, 2021 at 12:48PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A Wall Street analyst says it's time to buy this stock.

What happened

Shares of Chinese online-education company GSX Techedu (GOTU 1.02%) were rising today after an analyst with CLSA upgraded the stock to a buy. As of 12:50 p.m. EST, the shares were up 9%.

So what

CLSA analyst Youngrin Kim upgraded GSX Techedu stock to a buy today, according to Street Insider. A buy call is encouraging to investors by itself. But it's doubly encouraging because Kim had previously been bearish about GSX Techedu.

A chalkboard displays a chart on which dollar signs get progressively larger over time.

Image source: Getty Images.

Kim's buy call for GSX Techedu stock is a rare vote of confidence from Wall Street these days. According to analysts tracked by TipRanks, none currently recommend buying it. Four recommend holding while two recommend selling.   

Now what

General lack of confidence from Wall Street is likely due to ongoing investigations into GSX Techedu. The Securities and Exchange Commission is reportedly investigating the company for allegedly inflating sales. Management denies these allegations and claims to have begun pursuing a third-party audit prior to the launch of the SEC investigation. (As is the case with many international stocks, GSX Techedu's prior results are all unaudited.) But it presents enough risk to keep many investors away.

If GSX Techedu's financial results are all independently confirmed, then Kim could wind up being right about the future direction of the stock.  

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Gaotu Techedu Inc. Stock Quote
Gaotu Techedu Inc.
$1.98 (1.02%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.