Buy this beaten down ASX 100 share for very big returns: Goldman Sachs

It could be an opportune time to buy this growth stock.

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IDP Education Ltd (ASX: IEL) shares are having another tough session on the ASX boards on Tuesday.

At the time of writing, the ASX 100 language testing and student placement company's shares are down 8% to $20.30.

This means that the IDP Education share price is now down by a third over the last 12 months.

What's going on with this ASX 100 share today?

Investors have been hitting the sell button today following news that Canada will limit foreign student visas this year in response to housing shortages.

The government intends to cut its foreign student numbers to approximately 360,000, which will be down by over a third from 2023's levels.

Given that Canada is an important market for this ASX 100 share, investors appear to believe it could be a blow to its operations. Particularly given that it recently lost its language testing monopoly in the country.

Buying opportunity

The team at Goldman Sachs believes this is a buying opportunity for investors. In response to the news, the broker has reiterated its buy rating and $27.60 price target. This implies potential upside of 36% for investors over the next 12 months.

Commenting on the news, the broker said:

We assume Canada SP [student placement] volume growth of +43%/+9%/+13% in FY24/25/26E (FY24E should be relatively protected given the largest placement occurred in Sep-23), and total IELTS volume growth of -5%/+0%/+5%. We flagged the possibility of an upcoming Canada cap in our recent SP deep dive, though the magnitude of the reduction from CY23 levels is somewhat larger than we had anticipated.

Goldman isn't overly concerned because it believes the students that won't now be granted visas are ones unlikely to be using the company's services.

Similar to Australia the composition of a) the reduction in students; and b) IEL's student exposure are important determinants of the impact to IEL's SP volumes. Given government commentary regarding targeting bad actors and loopholes, and the post study work permit changes to private colleges, we expect the impact to be most significant for the lower-tier segment of the market (vocational and private colleges).

IEL's focus on bachelors degrees and above should help insulate it from the overall market impact, and we highlight that master's/doctorate degrees are excluded and post study work rights enhanced. That said, an overall market decline of the proposed magnitude will be difficult to completely avoid.

All in all, Goldman appears to see this selloff as overreaction and remains very bullish on the ASX 100 share.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Idp Education. The Motley Fool Australia has recommended Idp Education. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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