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Is G8 Education Ltd in the bargain bin?

According to UBS, childcare centre operator G8 Education Ltd (ASX: GEM) should be on your buy list this week.

UBS has slapped a buy rating on the stock citing its recent share price slump is due to a growth in industry supply for 2018 coming up against a drop in demand, but the broker says the response is “overdone”.

G8 Education shares have dropped down 49.5% from December 2017 highs of $4.42 to today’s price of $2.23.

The UBS broker has revised forecasts for softer occupancy in FY18 and lowered its target price on the stock from $3.95 to $2.75, but has maintained a buy rating on G8, which certainly gives investors stalking the stock something to think about.

Education stock investors would no doubt have checked out Navitas Limited (ASX: NVT) lately, which has been rated as underperforming by Credit Suisse, with a $4.00 price target after disappointing first semester growth.

Another one for the watchlist in the space is Idp Education Ltd (ASX: IEL), which although down slightly today to $7.60 at the time of writing, has had a good upswing in share price over the past 12-months with clear growth opportunities on the horizon.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended G8 Education Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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