Stock of the day: IDP Education

(AI video summary)

This video was created on 7 January for IG audiences by ausbiz.

ASX code: IEL

Market reactions to IDP Education's positive outlook

IDP Education recently saw a positive boost in the stock market following favourable commentary from Macquarie. The broker upgraded IDP Education to an 'outperform' rating, noting that uncertainties around education policies have been priced in.

These uncertainties were related to the lowering of student visa caps in Australia and Canada, as well as political changes like the resignation of Canadian Prime Minister Justin Trudeau. Macquarie set a price target of $16 and anticipates adjusted earnings of $92 million for the first half (H1) of the full year 2025.

This optimistic outlook reflects confidence in IDP Education's ability to navigate regulatory challenges and sustain growth.

Assessing strategic advantages

IDP Education operates in two main areas: English language testing systems and student placements. Historically, the company held a monopoly in English language testing, but increased competition has emerged as more countries open this market to other providers.

Despite this, the real driver for IDP Education remains its student placement services. Political pressures have impacted this area, but the company has continued to gain market share. The share price has fallen significantly, yet earnings have remained stable, indicating potential as a turnaround story.

Investment opportunities

With its current share price reflecting past challenges, IDP Education presents a potential opportunity for investors. The company's strong dividend yield and stable margins make it attractive, especially at current valuations.

Analysts view IDP Education as a 'buy', citing its potential for recovery and growth. The stock's past performance, reaching highs of $40, combined with its current market position, suggests room for appreciation. For traders considering IDP Education, the focus should be on its ability to adapt to regulatory changes and continue expanding its market presence.