TAL - TAL Education Group upgraded to Buy at UBS amid profitability improvement

After a strong earnings result in late October, UBS analyst Felix Liu sees TAL Education ( NYSE: TAL ) as an attractive buying opportunity.

“While 2Q is typically the peak season for revenue and margin given the summer school breaks, we view the strong 2Q still reflects TAL’s good transition post Double Reduction regulation,” he advised clients on Thursday. “Post 2Q, we expect TAL to be slightly profitable on non-GAAP basis in FY23. Given the improved profitability outlook, we assign more value to TAL’s cash balance and remaining businesses and upgrade to Buy.”

Liu added that a “still-healthy demand for non- academic education services” and cost controls encourage increased bullishness. Overall, the market has yet to appreciate the stability that management has been able to restore for the business, necessitating the upgrade from Neutral to Buy.

Shares of the Beijing-based company rose 7.56% in Thursday’s morning’s trading.

Read more on Bank of America’s bottom call for the stock .

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