For shareholders of international education giant IDP Education Ltd (ASX: IEL), the past few years have been challenging. Since reaching a record high of AUD 38.88 in November 2021, the company’s share price has plummeted by nearly 90%, falling to AUD 3.56. On June 3 alone, following a significant downgrade in earnings forecasts, the stock dropped by a staggering 48%.
What has caused this sharp downturn? Once a favored component of the ASX 200 index, IDP Education now faces severe headwinds, prompting questions about whether it can stage a comeback.
Policy Headwinds Impacting Core Markets
IDP Education has been hit hard by adverse policy developments across its major markets, including Australia, Canada, the United Kingdom, and the United States. In an early June trading update, the company disclosed that “policy uncertainty” has heavily pressured student enrollment volumes and its IELTS language testing business.
The company now projects a decline in student placements of 28% to 30% in fiscal year 2025, alongside an 18% to 20% decrease in language testing volumes compared to fiscal 2024.
This downturn stems not just from market sentiment but concrete barriers such as visa restrictions, processing delays, and tightening immigration policies. Visa issuance statistics for the third quarter, compared to the same period last year, reveal dramatic drops:
Canada: -65%
United States: -27%
Australia: -10%
United Kingdom: -9%
Consequently, IDP Education expects adjusted EBITDA for fiscal 2025 to range between AUD 115 million and AUD 125 million, approximately 30% below analysts’ previous estimates.
Pain May Persist Into Next Year
The company has cautioned that negative policy rhetoric may continue into fiscal 2026, suggesting that weak student intake this year could weigh on next year’s results. In response, management is undertaking strategic reviews of costs and productivity to bolster profitability, with plans to reduce adjusted indirect costs by 5% in the second half compared to last year.
Is There Hope for Recovery?
Despite the gloomy near-term outlook, some analysts remain cautiously optimistic. Macquarie has maintained its “outperform” rating on IDP Education, even while lowering its price target from AUD 16.00 to AUD 6.40. This still implies an upside potential of around 80% over the next 12 months.
The broker highlights enduring long-term structural growth drivers for international education, including increasing global mobility, sustained demand from international students, and the value of English language education. Their commentary states:
“Our thesis remains intact: over the long term, IDP is positioned for double-digit growth, despite the current trading environment being affected by negative rhetoric and anti-student immigration policies in key markets, which are expected to normalize in fiscal 2026. Cost reduction and improvements in volume and market sentiment will be key catalysts for re-rating.”
Conclusion
IDP Education faces significant short-term challenges, but with its global footprint, robust balance sheet, and a clear path toward business stabilization, the company has the potential to rebound strongly. Investors are advised to remain patient and demonstrate resilience amid this difficult period.
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