Huatai maintains a "buy" rating on Youdao Inc ADR Class A (DAO.US) with a target price of $5.92.

On November 15th, Huatai released a report evaluating the performance of Youdao Inc ADR Class A (DAO.US) in the third quarter of 2024. The report emphasized that Youdao Inc ADR Class A focuses on three core businesses: digital content services, online marketing, and AI subscription services. The company's profit-oriented approach has accelerated the reduction of losses for the whole year, with the expectation that the full-year Non-GAAP operating profit is expected to turn positive. Huatai maintains a "buy" rating for Youdao Inc ADR Class A, with a target price of $5.92. In terms of valuation, Huatai uses the SOTP valuation method, giving Youdao Inc ADR Class A a 15.00/27.63/5.00 PE multiple for the high school and STEAM/smart hardware/online marketing businesses, with a target price of $5.92. Recently, Youdao Inc ADR Class A released its unaudited financial report for the third quarter of 2024. The financial report shows that the net revenue of Youdao Inc ADR Class A reached 1.57 billion RMB in the third quarter, a year-on-year increase of 2.2%. The operating profit reached 110 million RMB, marking the first time in history that the company achieved a profit in the third quarter, with the single quarter profit amount reaching a new record high. The operating cash flow decreased to 85.40 million RMB, a 71.0% decrease year-on-year. As of the close of trading on November 14th in the Eastern Time Zone, the stock price of Netease Inc Sponsored ADR Youdao Inc ADR Class A rose by 2.48% to $4.95, with a total market value of $592 million.