Although China’s education sector is gaining online momentum, shares of GSX Techedu Inc (NYSE:GSX) have had a bull run, according to Deutsche Bank.
The GSX Techedu Analyst: Vitus Leung downgraded GSX Techedu from Buy to Hold and raised the price target from $50 to $90.
The GSX Techedu Thesis: The online after-school tutoring, or AST, segment has re-rated since the start of the COVID-19 pandemic, and the boom goes from strength to strength, Leung said in the Monday downgrade note.
Companies in the segment continue to have attractive opportunities due to benefits like sustainability, more affordable fees as well as bridging the gap in resources to lower-tier cities, the analyst said.
Yet education companies have outperformed the NASDAQ by 48% and the Hang Seng Index by 74% year-to-date, according to Deutsche Bank.
Shares of pure-play online education companies have appreciated even more, Leung said; GSX Techedu has surged by around 250% year-to-date, which the analyst said warrants a downgrade.
GSX Price Action: Shares of GSX Techedu were trading 2.53% higher to $83.18 at last check Monday.