IDP Education Ltd (ASX: IEL) shares have continued their decline on Thursday.
So much so, the ASX 200 stock has sunk 6% to a new four-year low of $12.34.
This latest decline means the language testing and student placement company's shares are now down almost 68% from its multi-year high.
Is this a buying opportunity? Let's see what one leading broker is saying about this struggling stock.
Time to buy this ASX 200 stock?
Analysts at Goldman Sachs continue to believe that investors should be snapping up this stock while it is down.
At the end of last month, the broker reaffirmed its bullish view on the ASX 200 stock ahead of its proposed entry into the China market. It said:
We are broadly positive on IEL's strategy to enter the China IELTS testing market directly, with attractive market characteristics and potential earnings upside over time, though timing and execution remain unclear. Chinese student volumes have exhibited resilience to regulatory tightening, with our analysis indicating ~15% IEL China market share is the breakeven point vs the current British Council royalty.
Though the earnings sensitivity is relatively small (with each 10% market share representing +/- 5% to group earnings), China direct testing could help IEL's IELTS volumes resume sequential growth from 2H25E and be an important catalyst to watch given IELTS' importance to investor sentiment.
But that isn't the only reason to buy this ASX 200 stock. Goldman also highlights that the company is well placed to benefit from structural growth in multi-destination placements and market share gains from a highly fragmented student placement market. 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.
Big returns
According to the note, the broker has retained its buy rating and $19.00 price target on IDP Education's shares.
Based on its current share price of $12.34, this implies potential upside of approximately 54% for investors over the next 12 months.
To put that into context, a $2,000 investment would turn into over $3,000 between now and this time next year if Goldman is on the money with its recommendation.
The broker also expects a 2.3% dividend yield in FY 2025, boosting the total potential return further.
