The IDP Education Ltd (ASX: IEL) share price has started the week deep in the red.
In afternoon trade, the student placement and language testing company's shares are down 5% to $21.58.
Why is the IDP Education share price sinking today?
Investors appear to have been selling IDP Education's shares due to concerns over the impact the COVID-19 crisis in India could have on its performance.
The Indian market is the biggest contributor to the company's earnings. So with COVID-19 numbers sadly rising rapidly in the country, there is significant downside risk to earnings estimates.
Is this a buying opportunity?
One leading broker that believes the weakness in the IDP Education share price is a buying opportunity is Goldman Sachs.
This morning the broker reaffirmed its buy rating and $29.90 price target on the company's shares.
Based on the current IDP Education share price, this implies potential upside of almost 39% over the next 12 months.
What did Goldman say?
Goldman Sachs believes IDP Education is well-placed for growth over the long term.
And while it acknowledges that the COVID-19 outbreak in India will disrupt its recovery, it feels investors should look beyond this.
It said: "We believe there is an attractive long-term opportunity for IEL and the business is well positioned for the re-opening of international students markets. IELTS volumes have rebounded to pre-COVID levels, and the key to the recovery is a bounce-back in student placement volumes."
"Although this remains disrupted in the near term, particularly with the current COVID outbreak in India, the fundamentals of the business look very strong. We think the key growth driver from here will be increasing student placement volumes into multi-destination, where we see a long runway for growth as IEL gains share in the highly fragmented market for student placement. On our estimates, IEL currently has <5% market share in its two key multi-destination markets, the UK and Canada. We see long term share being materially higher than current levels," it added.
Goldman concluded: "COVID is disrupting the recovery in Student Placement Volumes, particularly the ongoing outbreak in India; for context, Indian students represent 43% of IEL's volumes (as of FY20). IEL's key markets (Australia, UK, Canada) have all closed borders to non-citizens traveling from India, which presents a risk in the near term to Indian student placement volumes. We cut our FY21 student placement volumes to reflect the near term disruption. Our 12m TP is unchanged at A$29.90 and we remain Buy rated."
