S&P/ASX 200 Index (ASX: XJO) stock IDP Education Ltd (ASX: IEL) closed down a precipitous 6.19% on Wednesday.
Shares ended the day changing hands for $8.33 apiece.
That sees the IDP Education share price down 51% since this time last year. A sharp loss that will be only marginally mitigated by the 18 cents a share in partly franked dividends IDP has paid out over the 12 months.
Atop getting hit by the broader market turmoil, shares in the listed language testing and student placement provider have come under pressure as both Canada and Australia have reigned back their foreign student acceptance numbers.
But with that picture potentially about to change for the better, Macquarie Group Ltd (ASX: MQG) has an outperform rating on the ASX 200 stock for the year ahead.
Why Macquarie is bullish on the ASX 200 stock
With an eye on the upcoming election in Canada and Australia, Macquarie noted that the best outcome for the ASX 200 stock is if the current Canadian and Australian governments win those elections.
According to Macquarie:
Outcomes of upcoming elections in Canada (28 April 2025) and Australia (3 May 2025) will provide greater certainty for Student Placement stabilisation, and an eventual return to growth.
For IDP Education, best case outcomes are that current governments win the upcoming elections, given more accommodative student immigration policy than the opposition, and recent polling / wagering odds suggests this is likely.
The Canadian market is big business for the company. IDP Education places around 25% of its international student volumes in Canada.
Australia is even more vital, accounting for around 40% of IDP's student volumes.
Commenting on the strong outlook of the Aussie market for the ASX 200 stock, Macquarie said:
Irrespective of the election outcome, on a rolling 12-month basis to February 2025, current volumes are: 1) 10 – 20% below Labor and opposition proposed caps, and 2) proposed caps imply a 3 – 5% long-run CAGR [compound annual growth rate] in volumes, which in our view is a precedent for future growth.
Macquarie's analysts also pointed out that after the past year's sizeable share price fall, IDP Education is currently trading on its lowest 12-month forward price-to-earnings (P/E) ratio since the company listed on the ASX back in November 2015.
The broker has a $16 a share price target on the ASX 200 stock. That represents a potential upside of 92% from Wednesday's closing price. And it doesn't include those upcoming dividends.
