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Highlights
- Shares down 68%: IDP Education’s stock has fallen sharply, reaching its lowest point in four years.
- Goldman Sachs remains bullish: Despite the decline, Goldman Sachs maintains a "buy" rating and a $19.00 price target, forecasting a 54% upside.
- Strong growth potential: The broker points to the company’s strategy to enter the Chinese market and growth opportunities in student placement as key factors for recovery.
IDP Education Ltd (ASX:IEL) has seen a significant decline in its stock price, with shares sinking 6% on Thursday to reach a new four-year low of $12.34. This drop marks a near 68% decrease from the company’s multi-year high. As investors watch the stock’s downward trend, the question arises: is now the right time to buy this ASX 200 stock?
Analyst Outlook: A Bullish Case for IDP Education
Despite the significant decline in IDP Education’s stock price, Goldman Sachs analysts continue to see the company as a strong investment opportunity. The broker has reaffirmed its positive outlook, particularly focusing on IDP's potential expansion into the Chinese IELTS testing market.
Goldman Sachs believes the entry into China, despite uncertainties around timing and execution, could offer substantial upside in the long term. The broker cites the resilience of Chinese student volumes, even amid regulatory tightening, and suggests that gaining a 15% market share in China could make the business more profitable. They note that the direct testing in China could help drive sequential growth in IELTS volumes, especially starting from the second half of 2025, which would be a significant catalyst for the company’s stock.
Beyond the Chinese market, Goldman Sachs also sees substantial long-term growth potential for IDP Education. The company is well-positioned to capitalize on structural growth in multi-destination student placements, particularly as Australia continues to recover post-pandemic. Additionally, there is potential for market share gains in the highly fragmented Canadian and UK student placement markets. IDP’s reinvestment in digital capabilities to enhance its competitive position also bodes well for future earnings streams.
Big Returns Expected
Goldman Sachs has maintained a "buy" rating on IDP Education with a price target of $19.00, implying an upside of around 54% from its current price of $12.34. This target suggests the stock could significantly outperform over the next 12 months. To put this into perspective, an investment of $2,000 at the current share price could grow to over $3,000 if Goldman’s forecast proves accurate.
In addition, Goldman expects IDP Education to provide a dividend yield of 2.3% in FY2025, which would further enhance potential returns for investors.
