CMS Cuts EAST BUY TP to $42; Gaotu Leverages on 'Mini Essay' Saga
The share price of $EAST BUY(01797.HK$ shed 16% in the past 3 trading days due to the "mini essay" saga, which involves star anchors, editors and management, China Merchants Securities issued a research report on last Friday saying.
Gaotu Techedu Inc. $Gaotu Techedu(GOTU.US$ 's share price rose sharply last Thursday night, which was believed to be driven by a surge in GMV brought about by the above saga and speculation about Dong Yuhui's joining of Gaotu Techedu's live stream.
China Merchants Securities kept its rating at Overweight on EAST BUY and Gaotu Techedu, as the development of the fundamentals of the two companies is as usual, believing that the big picture is not yet finalized. Therefore, it is not advisable to draw conclusions too early.
China Merchants Securities adjusted its profit forecast for EAST BUY and cut its target price to $42 from $59, mainly due to the spin-off of its education business.
China Merchants Securities also adjusted its profit forecast for Gaotu Techedu, adding a new profit forecast for Gaotu Techedu's live streaming e-commerce business, and raised its target price from US$3.9 to US$5.5.
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