Jefferies cuts TAL International stock price target on device sales drag

Jefferies has revised its price target on TAL International (NYSE:TAL) stock downward to $11.50 from $13.00, while keeping the stock's rating at Hold. The adjustment was made in response to TAL's earnings call on Tuesday evening Hong Kong time. The company's fiscal second-quarter 2027 results revealed that sales had fallen short of expectations, with learning devices being a significant drag on growth.

Despite this, operating margin for the quarter exceeded expectations. Jefferies has also adjusted its revenue forecasts for learning devices following the results. However, the firm did not incorporate the recent margin improvement into its outer-year estimates. The company's limited visibility on the underlying drivers of the margin performance and concerns about its sustainability were cited by Jefferies.

TAL maintains a strong gross profit margin of 56% and trades at a low P/E ratio of 7.57. According to InvestingPro analysis, the stock appears undervalued at its current price, and the platform offers additional insights like Fair Value estimates and 11 ProTips for investors.