Shares of New Oriental Education and Technology Group (NYSE: EDU) fell in pre-market trading on Monday as the U.S. Securities and Exchange Commission (SEC) named Oriental Education in a Holding Foreign Companies Accountable Act (HFCAA) update.
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The HFCAA, which came into effect in 2020, requires the SEC to identify public companies that have a branch or office in a foreign jurisdiction, and the Public Company Accounting Oversight Board (PCAOB) has the “responsibility for determining that it is unable to inspect or investigate completely a registered public accounting firm or a branch or office of such a firm because of a position taken by an authority in a foreign jurisdiction. “
In this case, the SEC has identified New Oriental as one such company.
New Oriental Education acknowledged this update and stated that this was the first time the Chinese provider of private educational services had been named.
The HFCAA prohibits a company named by the SEC from trading its American depositary shares (ADSs) on the exchange or in over-the-counter trade “if the company has been identified by the SEC for three consecutive years due to PCAOB’s inability to inspect the auditor’s working paper.”
New Oriental stated that currently, the company “is actively exploring possible solutions to protect the interest of its stakeholders.”
Is EDU a Good Stock to Buy?
Wall Street analysts are bullish about the stock, with a Strong Buy consensus rating based on four unanimous Buys.
The average price forecast for EDU stock is $32.20, implying upside potential of 26.4% at current levels.
