Why IDP Education (ASX:IEL) shares are on watch Tuesday

The international education services provider's immediate business has been ravaged by COVID-19 and the Delta strain. So why are these experts so bullish?

| More on:
Children excitedly watching an asx share price movement on a computer

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

IDP Education Ltd (ASX: IEL) shares will be keenly monitored on Tuesday morning after a round of endorsements about their prospects.

Prior to this morning's open, UBS brokers raised their price target for the international education provider by 13%.

They are now forecasting the IDP share price to hit $36.40. That's an 11% premium on Monday's closing price of $32.72.

The stock is already up close to 60% for the year and more than 20% over the past month.

Tribeca Investment Partners portfolio manager Jun Bei Liu told The Motley Fool's Ask A Fund Manager on Tuesday morning that IDP Education has plenty more growth to come.

"It has gone up a lot but, in terms of its earnings, it has yet to return," she said. 

"In the next 12 months, we do expect meaningful returns for this company, as its earnings grow higher and its multiple continues to expand."

Why the ducks are all lined up for IDP shares

Liu revealed that IDP shares are among the 5 biggest positions her fund holds currently.

Australian universities, as one of the big beneficiaries of IDP's services, previously held more than 40% ownership of the company.

But when COVID-19 difficulties hit the tertiary sector, Liu's team bought up big.

"They sold down some parts of their stake and then we took advantage of it," she said.

"We have always liked this company. It's a very high-quality company exposed to global student placements."

Liu reminded investors IDP doesn't just do business bringing in foreign students into Australia.

"The amazing thing about this company is that it's not just students coming to Australia. It's going global," she said. 

"It has huge exposure across the UK, Canada, and many other countries. Essentially just leveraged to that global movement from students wanting to be educated in some of the top universities."

Of course, IDP's short-term numbers have taken a massive hit due to restrictions on international travel. But Liu has faith that IDP is a strong post-pandemic recovery story.

"Once we have all the vaccinations or vaccination passports, these students will return."

Based on the current IDP share price, the company commands a market capitalisation of around $9.1 billion.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Idp Education Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

Businessman working and using Digital Tablet new business project finance investment at coffee cafe.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Guess which ASX 200 share Goldman Sachs says is a buy

The broker doesn't think Trump will spoil the party for this stock.

Read more »

A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in November

These quality stocks are top picks in November according to the broker.

Read more »

Male building supervisor wearing high vis vest and hard hat stands and smiles with his arms crossed at a building site
Broker Notes

1 ASX 300 stock just upgraded by brokers (and 2 downgraded)

Here's the latest ratings changes.

Read more »

a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in November

These quality stocks are top picks in November according to the broker.

Read more »

A man sees some good news on his phone and gives a little cheer.
Broker Notes

2 ASX 300 shares to buy now for 50% to 80% returns

These shares could have big return potential according to brokers. Let's see what they are saying.

Read more »

Broker looking at the share price.
Broker Notes

3 ASX All Ords shares just got BIG upgrades from top brokers

Leading brokers believe these ASX All Ords stocks could fly higher into 2025.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »