New Oriental Education & Technology (EDU) saw its stock surge 5.04% in pre-market trading on Monday, following a positive research report from Daiwa and the announcement of a new shareholder return plan. The education company's shares have been boosted by improving business trends and analyst optimism.

Daiwa, in its recent research report, expressed confidence in New Oriental's business stability. The firm highlighted improvements in the K-9 autumn student retention rate and noted that the overseas exam preparation business is no longer deteriorating. These factors contribute to a more positive outlook for the company's overall performance.

Adding to investor enthusiasm, New Oriental announced plans to return at least 50% of the previous fiscal year's net profit attributable to shareholders through dividend distributions or share buybacks, starting from FY2026. Daiwa analysts believe this shareholder return ratio could potentially be much higher, possibly reaching high double-digit percentages or even exceeding 100%. This commitment to shareholder value is seen as a key positive catalyst for the stock.

In light of these developments, Daiwa has raised its revenue forecasts for New Oriental's FY2026-2028 by 1% to 2% and increased earnings per share forecasts by 0.2% to 5%. The firm reiterated its "Buy" rating on the stock and raised the target price from HK$43 to HK$49, further fueling investor optimism and contributing to the stock's pre-market rally.