Tal Education (NYSE:TAL) was cut to underperform and New Oriental Education (NYSE:EDU) downgraded to neutral at Credit Suisse, citing increased regulatory risks in China. Tal Education fell 2.5% in premarket trading, while New Oriental dropped 3.5%.
Tal Education cut to a sell equivalent at Credit Suisse as the firm is now more cautious on the "worst-case scenario" for upcoming regulation on after school tutoring, according to analyst Alex Xie. Xie assumes a "complete ban" on tutoring on weekends and holidays for K9 students in a bear case.
Tal Education PT cut to $26 from $54.
New Oriental cut to neutral from outperform due to "significant regulatory risk for the most recognized education brand for all ages in China," Xie wrote in note.