Morgan Stanley Upgrades Youdao; Sees 78% Upside

• Morgan Stanley analyst Sheng Zhong upgraded Youdao Inc (NYSE:DAO) to Overweight from Equal Weight with a price target of $15, up from $13. The price target implies an upside of 77.8%.
• Demand for learning services in China remains strong, and market leaders are "building advantages in their respective areas," Zhong tells investors in a research note. 
• The analyst says the worst of the regulatory clampdown is now over, stabilizing operations. 
• Sentiment towards the space remains low, but "the worst is over and quality names are undervalued," writes Zhong. 
• The analyst upgraded Youdao and TAL Education Group (NYSE:TAL) while keeping an Overweight rating on New Oriental Education & Technology Group Inc (NYSE:EDU).
• Price Action: DAO shares traded higher by 6.18% at $8.94 on the last check Monday.