New Oriental Earnings: Fair Value Estimate Cut by 6% as Demand Softens Amid Decreasing Consumption

New Oriental's second-quarter fiscal 2025 (ending May) results, excluding its subsidiary East Buy, outperformed previous guidance. However, management's outlook for the remaining fiscal quarters highlights deeper-than-expected challenges amid decreasing consumption. Consequently, we have reduced our earnings estimates by 16% to USD 423 million for fiscal 2025 and by 9%-12% for fiscal 2026-29, resulting in a 6% decrease in our fair value estimate to USD 58 (HKD 45.20). We think New Oriental is attractive now after a 24% decline in the share price following disappointing guidance.