Macquarie has moved to an Outperform rating on TAL International (NYSE:TAL), increasing its price target to $18.00 from $13.10. At the time referenced, that higher target equates to a roughly 42% upside relative to a $12.70 share price. Despite the change from Macquarie, the broader analyst consensus remains a Strong Buy, with target prices spanning from $11.54 to $17.70, according to InvestingPro data.
The analyst upgrade was grounded in recent operational momentum across TAL’s core businesses. TAL’s learning services reported year-over-year growth in both offline and online channels. Offline revenue growth was driven primarily by higher enrollment and the expansion of learning centers, while average selling price held steady. Those trends contributed to an overall revenue increase of 36.1% year over year, and the company maintained gross profit margins of 55.2%.
The learning devices segment also posted year-over-year gains in both sales and unit volume during the third quarter. Management noted, however, that the pace of growth slowed relative to earlier quarters, attributing part of that moderation to shifts in product launch cycles rather than underlying demand deterioration.
On an operating basis, TAL reversed a non-GAAP operating loss in the third quarter of fiscal year 2025, recording a non-GAAP operating profit margin of 13.5%. That margin was 1 percentage point higher than the second quarter, and management cited lower marketing spending alongside disciplined cost control as the main contributors to the improvement.
InvestingPro analysis referenced with the operational data indicates TAL is profitable over the last twelve months and carries a PEG ratio of 0.33, a measure that the analysis interprets as the stock trading at a reasonable valuation relative to its growth rate. Looking ahead, Macquarie projects a fourth-quarter non-GAAP operating profit margin of 11% for TAL, compared with a loss in the same quarter a year earlier. The firm does expect a quarter-on-quarter margin contraction in Q4, driven by higher marketing needs for the winter holiday period.
InvestingPro further rates TAL’s financial health score as "GOOD" and notes that additional ProTips and a Pro Research Report are available for this company, which it lists with a $7.73 billion market capitalization. These evaluations emphasize the combination of improved profitability metrics and ongoing revenue growth.
In a separate development, TAL Education Group released third-quarter fiscal 2026 results that materially exceeded analyst profit estimates while narrowly missing revenue projections. Market reaction to the earnings was positive, underscoring the emphasis investors placed on the company beating profit expectations despite the revenue shortfall. The results were highlighted by observers as evidence of the company’s ability to deliver stronger-than-expected earnings outcomes even when revenue falls slightly short of forecasts.
For investors and stakeholders, the recent upgrade and quarterly disclosures together provide updated signal points on TAL’s trajectory: stronger enrollment and learning center expansion, stable pricing in services, a return to non-GAAP operating profitability, continued device sales growth albeit at a moderated pace, and analyst optimism reflected in a lifted price target and favorable InvestingPro metrics.
Summary: Macquarie upgraded TAL International to Outperform and raised its target to $18.00 from $13.10, citing robust year-over-year service revenue growth, stable selling prices, expanding learning centers, solid gross margins of 55.2%, and a return to non-GAAP operating profitability with a 13.5% margin in Q3 FY2025. InvestingPro analysis shows trailing twelve-month profitability and a PEG ratio of 0.33; Macquarie expects an 11% non-GAAP operating margin in Q4 despite higher seasonal marketing spend. TAL’s third-quarter fiscal 2026 earnings beat profit estimates but slightly missed on revenue.
- Key points:
- Macquarie upgraded TAL to Outperform and raised its price target to $18.00 from $13.10, implying a 42% upside from $12.70 - impacts equity investors and analyst coverage of education stocks.
- TAL reported 36.1% year-over-year revenue growth and maintained a 55.2% gross profit margin, supported by higher enrollment and learning center expansion - relevant to the education services and consumer learning sectors.
- The company returned to non-GAAP operating profitability with a 13.5% margin in Q3 FY2025; Macquarie forecasts an 11% margin in Q4 even with seasonal marketing increases - material to assessments of corporate margin structure and operating leverage.
- Risks and uncertainties:
- Revenue for the most recent quarter slightly missed analyst projections, signaling potential variability in top-line performance - a concern for investors focused on revenue growth in the education sector.
- Growth in the learning devices business slowed versus prior quarters, with management citing product launch cycle shifts - this introduces uncertainty for device sales momentum in the consumer electronics element of the business.
- Macquarie expects quarter-on-quarter margin contraction in Q4 due to higher winter holiday marketing needs, which could compress near-term profitability despite year-over-year improvement - impacting short-term earnings visibility for the market and corporate cost planning.