It has been a brutal few years for shareholders of international education giant IDP Education Ltd (ASX: IEL).
Since hitting an all-time high of $38.88 back in November 2021, the IDP Education share price has crashed 90% to $3.56. This includes a jaw-dropping 48% plunge on 3 June alone following a major earnings downgrade.
So, what on earth is going on? And could this once-beloved ASX 200 stock be gearing up for a comeback?
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What's gone wrong?
IDP Education has been hit by a perfect storm of policy headwinds across all its major markets — Australia, Canada, the UK, and the US.
In a trading update earlier this month, the company revealed that "policy uncertainty" is weighing heavily on both student placement volumes and its IELTS language testing business.
The company now expects FY 2025 student placement volumes to decline by 28% to 30%, with language testing volumes also falling 18% to 20% compared to FY 2024.
It is not just sentiment driving this. Visa restrictions, processing delays, and tighter immigration policies are all biting hard. Just look at the visa issuance data for the third quarter compared to the prior corresponding period:
- Canada: -65%
- USA: -27%
- Australia: -10%
- UK: -9%
It is no surprise then that IDP Education now expects adjusted FY 2025 EBIT to come in between $115 million and $125 million. This about 30% lower than what analysts were previously expecting.
Could things get worse?
Unfortunately, the pain may not be over just yet.
The company has warned that the negative policy rhetoric is likely to continue into FY 2026. That means the subdued student enrolment pipeline this year could drag on results well into next year.
In response, management is undertaking a strategic review of costs and productivity to shore up profitability. Adjusted overhead costs for the second half are expected to be 5% lower than the same period last year.
Could things get better?
Despite the doom and gloom, some analysts still see a silver lining.
Macquarie, for instance, has maintained an outperform rating on the stock. While it slashed its price target on IDP Education shares from $16.00 to $6.40, that still implies potential upside of approximately 80% over the next 12 months.
The broker believes the long-term structural growth drivers of international education — such as population mobility, global student demand, and the value of English-language education — remain intact. It said:
Our thesis is unchanged – long-term IDP can deliver double-digit growth, albeit, current trading is impacted by negative rhetoric/anti-student immigration policy settings in key markets, which should annualise in FY26. Cost-out and improving volumes/sentiment are key re-rating catalysts.
All in all, IDP Education is undoubtedly facing serious short-term headwinds. But with a global footprint, strong balance sheet, and a clear roadmap to stabilise the business, there's a case to be made that it could rise from the ashes. Investors just need to be patient. And brave.
