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Macquarie has revised its earnings forecasts for IDP Education (ASX:IEL), an English language testing service provider, for the fiscal years 2025 and 2026 following Canada's recent announcement of reduced international student permits. Earlier this month, the Canadian government revealed a 10% reduction in the target for international study permits for 2025, decreasing the figure from 485,000 to 437,000.
The broker estimates that this regulatory change could lead to a nearly 43% decline in international students heading to Canada, which translates to approximately a 3% volume headwind for the International English Language Testing System (IELTS) administered by IDP. Consequently, Macquarie has cut its earnings estimates for FY25 by a modest 1%, while forecasting a more significant 12% decline for FY26. The anticipated impact of reduced volumes is expected to primarily affect the second half of FY26.
Despite the downward revisions, Macquarie has maintained a 'Neutral' rating on IDP Education's stock, keeping the price target steady at AU$16.00 per share. Current analyst sentiment on the stock remains mixed, with seven out of twelve analysts rating it as a "Buy" or higher, four as "Hold," and one as "Sell" or lower. The median price target among analysts stands at AU$18.90, according to LSEG data.
IDP Education’s stock has struggled this year, down 22.6%, though it experienced a slight rebound of 1.4% to AU$15.57.
