Citi double upgraded its rating on GSX Techedu to Buy following the ‘overdone’ selloff on Friday as the firm can still deliver double-digit topline growth this year, according to a report by The Fly.
- Citi analyst Mark Li rated GSX Techedu to Buy with a price target of $56, down from a Sell price target of $66. Shares plunged 42% on Friday after a selloff.
- Li believes the selloff was triggered by fears of government regulation in China’s after-school tutoring market and selective investors’ forced selling.
- Sina News earlier reported a potential AST regulation controlling the number of players in the market, tuition prices, and time.
- Li said the market fear is “overdone” and estimates GSX can still achieve 45% topline growth in 2021, coupled with potentially better margins.
- The analyst also opened a 30-day “Positive Catalyst Watch” as he said more clarity will come which will drive share prices higher.