Additionally, in the company’s latest earnings release, gross billings were up 5.3% in the latest quarter which drove up net revenues by 30.2% from the same quarter last year.
The Beijing-based business, which provides K-12 after-school tutoring as well as foreign language courses and test prep, predicts Q4 gross billings to increase another 4%, prompting Citi to hike its Q4 revenue forecast by 4%. For 2024, Citi expects revenue to increase by a substantial 12%.
But while Gaotu Techedu’s (GOTU) e-commerce business has stabilized, Citi remains cautiously optimistic given the potential shifts from online to offline market dynamics in a post-pandemic and deregulated China.
Along with a Buy rating, Citi lifted its price target on Gaotu Techedu (GOTU) by more than 80% to $4.50, a 37% premium above Tuesday’s closing price.
Shares were up more than 13% on Wednesday.
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