While New Oriental Education & Tech Grp's (NYSE:EDU) performance in the fiscal fourth quarter (May quarter) is likely to be under pressure, both revenue and profitability may recover from the first quarter, according to BofA Securities.

The New Oriental Education & Tech Analyst: Lucy Yu upgraded New Oriental Education & Tech from Neutral to Buy and raised the price target from $18.80 to $36.60.

The New Oriental Education & Tech Takeaways: Fiscal 2023 is likely to be "a year of a new start," with several multiple business lines reflecting positive trends," Yu said in the upgrade note.

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The analyst mentioned four encouraging trends:

• "Overseas test prep and consulting, and domestic test prep have bottomed out and started to grow positively," Yu wrote.
• New businesses, including non-academic training and intelligent learning system and devices have generated growth with slowing retention rates.
• The Koolearn online platform "has made notable progress with 23mn followers/subscribers, which will serve as one of the key growth drivers," she said.
• "High-school tutoring remains stable despite COVID disruption on offline, due to online-merge-offline teaching system," the analyst added.

EDU Price Action: Shares of New Oriental Education & Tech were down 7.1% Friday at $26.94. 

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