Gaotu Techedu initiated with a Neutral at Goldman Sachs

Goldman Sachs initiated coverage of Gaotu Techedu with a Neutral rating and $2.60 price target. The analyst believes China’s K-12 education sector is entering a new phase of development to satisfy non-academic learning and self-learning demand as a supplement to in-school education. Industry leaders like New Oriental and TAL will deliver better business resilience and growth visibility given their diverse service offerings, capacity expansion and innovation backed by strong cash positions, the analyst tells investors in a research note. Goldman says Gaotu’s high school profit growth may be slower due to class format diversification while its exploration of non-academic tutoring remains at an early stage.