- Morgan Stanley analyst Sheng Zhong upgraded Youdao Inc DAO to Overweight from Equal Weight with a price target of $15, up from $13. The price target implies an upside of 77.8%.
- Demand for learning services in China remains strong, and market leaders are "building advantages in their respective areas," Zhong tells investors in a research note.
- The analyst says the worst of the regulatory clampdown is now over, stabilizing operations.
- Sentiment towards the space remains low, but "the worst is over and quality names are undervalued," writes Zhong.
- The analyst upgraded Youdao and TAL Education Group TAL while keeping an Overweight rating on New Oriental Education & Technology Group Inc EDU.
- Price Action: DAO shares traded higher by 6.18% at $8.94 on the last check Monday.
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