The IDP Education Ltd (ASX: IEL) share price is having a poor session.
In early afternoon trade, the ASX 200 language testing and student placement company's shares are down almost 2% to $23.51.
One broker that sees this as a buying opportunity is Goldman Sachs. This morning, the broker has spoken very positively about the company and revealed that it is tipping some big gains over the next 12 months.
Goldman says buy this ASX 200 share
According to the note, the broker has reiterated its buy rating and $29.65 price target on the company's shares. This implies a potential upside of 26% for investors over the next 12 months.
In addition, the broker is expecting a ~2% dividend yield in FY 2024, which boosts the potential total return to approximately 28%.
What did the broker say?
There are three key reasons why Goldman believes that IDP Education is an ASX 200 share to buy right now despite its premium valuation. It explains:
We believe IEL's premium valuation is justified given the medium-term earnings potential driven by: (1) Structural growth in multi-destination placements, supplemented by an ongoing Australian recovery; (2) Ability to grow market share in the highly fragmented Canadian and UK SP markets; (3) Reinvestment in digital capabilities to increase competitive moat and generate new earnings streams.
Goldman has also listed a couple of catalysts that it feels could potentially drive its shares higher in the near term. It said:
Key catalysts: (1) Continued evidence of an Australian international student recovery that is above pre-pandemic levels; (2) Bolt-on M&A in under-penetrated markets.
The broker then concludes:
With its growth trajectory driven by high quality Student Placement earnings, and trading below its historical P/E multiple, we are Buy-rated.
