The trading week started out very well for the rather volatile Chinese stock TAL Education Group (TAL -9.45%). The company's shares zoomed nearly 8% higher on the day, following a pair of recommendation upgrades from two different analysts.
Bank of America (BAC 2.33%) analyst Lucy Yu ticked up her recommendation on TAL to neutral from the previous underperform (sell, in other words). Yu also made an upward adjustment to her price target on the stock; it is now $4.70 per share (previously $4.30).
The prognosticator was pleasantly surprised by TAL's second quarter of fiscal 2023 results, which were published last Friday, and in her opinion, were "solid." This, despite the fact that the company's revenue dived to just over $294 million from over $1.4 billion in the same quarter of fiscal 2022.
The story was quite different on the bottom line, however, as TAL flipped to a non-GAAP (adjusted) net income of nearly $27 million against a $760 million loss in the year-ago period.
Meanwhile, CICC analyst Liping Zhao also upgraded her recommendation on the stock; only she's more bullish than her Bank of America peer. Zhao's tag on TAL is now outperform (read: buy) from market perform (neutral), with a price target of $6 per share.
The revenue swoon can be chalked up almost entirely to the Chinese government's crackdown on for-profit tutoring services for school-age students that was enacted last year. That dealt a heavy blow to TAL's business, but the company seems to be doing a good job so far of getting back on its feet.