Goldman Discusses New Oriental Education & Technology Group Earnings (EDU)

Goldman Sachs is out with a research report on New Oriental Education & Technology Group Inc. (ADR) EDU after it reported earnings. It has a Neutral rating on shares. In a note to clients, Goldman writes, "We view these results positively. Accelerating revenue growth in 2Q (albeit benefiting partly from a post-Expo recovery) and solid 3Q revenue guidance for 34% yoy growth (at midpoint) despite more difficult comps (from longer winter break last year) demonstrate the benefits from the heightened capacity build-out and marketing spend over the summer. While operating expense growth remained high at 57% yoy in 2Q, leading to an operating loss despite stronger-than-expected revenue growth, we attribute this partly to fixed costs carried over from 1Q. EDU also indicated increased focus on expense control and utilization improvement in the press release, which we believe is encouraging and should increase confidence in margin improvement in FY12." Shares of EDU closed at $107.71 on Friday.