The ASX 100 index is home to the 100 largest companies on the Australian share market.
While these tend to be steady blue chip type companies, there are a few growth shares in there as well that have the potential to generate big returns for investors.
One such ASX 100 share, according to analysts at Goldman Sachs, is IDP Education Ltd (ASX: IEL). It is a language testing and student placement company with operations across the globe.
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Why is IDP Education and ASX 100 share to buy?
According to a note out of the investment bank this morning, its analysts believe the significant weakness in the IDP Education share price this year has been an overreaction and created a buying opportunity for investors.
Following a review of recent developments that could impact IDP Education, the broker has reiterated its buy rating and $29.65 price target on the ASX 100 share.
If Goldman is on the money with its recommendation, then it would mean a potential return of approximately 39% over the next 12 months before dividends.
And if you include the 2.1% dividend yield the broker is forecasting in FY 2024, the total potential return goes beyond 40%.
What did the broker say?
Goldman has been looking at tensions between Canada and India. It said:
[W]e estimate that IEL's earnings exposure to India-Canada is ~19%, however we take no view on the likely duration and outcomes of the diplomatic tensions. That said, we note that a) Indian student volumes could be effectively redirected into other IEL destination markets over time (e.g. Australia, UK).
[T]he share price is -13% since the tensions began, in our view implying a material hit to IEL's business (noting this is a simplification of recent price moves).
In addition, the broker touches on recent visa changes in Australia. It isn't concerned by the development. Goldman explains:
We do not believe recent Aus Govt visa changes will have a material impact on IEL, given its status as a leading provider of high quality, genuine students to universities while the changes target loopholes and non-genuine entrants. As the smaller end of the SP market is tightened up, in our view IEL can gain share and strengthen its competitive position. However, ongoing government announcements need to be closely monitored for any impacts on IEL's Australian business (42% FY23A SP volumes).
In light of this, the broker continues to forecast a "+21% FY23-26E EPS CAGR," which it feels makes the ASX 100 share great value today.
