The IDP Education Ltd (ASX: IEL) share price has been a positive performer on Thursday.
In afternoon trade the student placement and language testing company’s shares are up 3% to $19.37.
Why is the IDP Education share price charging higher?
Investors have been buying IDP Education’s shares today after it was the subject of a positive broker note out of Goldman Sachs.
According to the note, the broker has retained its buy rating and lifted its price target by 32% to $22.50.
Even after today’s gain, this price target still implies potential upside of more than 16% over the next 12 months.
Why is Goldman Sachs bullish on IDP Education?
Goldman notes that IDP Education is well positioned for the eventual restart of the international student market.
It also believes that trading conditions are continuing to improve. Its research appears to support the view that there has been a continuation of the utilisation recovery of the International English Language Testing System (IELTS) network from the 55% reported as at mid-August.
And while it expects a recovery to pre-COVID volumes to take until in FY 2022, it believes it is well worth sticking with the company until then.
Especially given positive indicators such as the UK starting to open up international travel and pilot programs being discussed in South Australia and the Northern Territory for international students to re-enter Australia.
A positive future.
It is IDP Education’s long term prospects that most excites analysts at Goldman Sachs.
They note that it is a leading player exposed to long dated structural tailwinds in international education and well positioned to increase its market share in the fragmented student placement market.
The broker also sees opportunities from a potential restructure of the IELTS agreement and for further bolt-on acquisitions.
Should you invest?
I agree with Goldman Sachs and believe IDP Education would be a great long term option for investors right now.
Though, at 46x estimated FY 2022 earnings, it certainly isn’t a bargain buy. So I would suggest investors restrict an investment to just a small part of a balanced portfolio.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. 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.