Shares of the ASX-listed IDP Education Ltd. (AU:IEL) plunged 5.85% today after Canada announced its plans to cut down on foreign student visas. As per the new rules, the approved study permits in 2024 will be 35% lower compared to 2023 figures, impacting the company’s operations in the country. UK and Canada ranked as IDP’s second and third-largest destination markets by volume, respectively, in Fiscal 2023.
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As a result, investors reacted negatively to the news, leading to a sell-off in IEL shares. The stock lost over 30% in value in the last 12 months.
IDP Education is a global consulting company that helps individuals realize their international education aspirations. The company operates in over 50 countries worldwide.
More Details on the Changed Permits
Immigration, Refugees, and Citizenship Canada (IRCC) announced that the government will implement a two-year intake cap on international student permit applications to manage new growth. The cap for 2024 is anticipated to result in the approval of 360,000 study permits.
This move came in response to the growing pressure on the country’s housing, healthcare, and other services amid the influx of international students to Canada. The new study permit applications, which will be accepted in 2025, will be re-evaluated at the end of this year.
For the full year that ended in June 2023, IDP reported a 24% growth in revenue and a 45% jump in net profit compared to the previous year. During the year, student placement volumes saw a significant increase of 53%, with nearly all source markets registering robust double-digit growth rates.
Notably, volume to Canada experienced 34% growth, even as visa processing delays in the first half and elevated visa rejection rates adversely affected the overall growth rate.
What is the Price Forecast for IDP Education Share?
Post-announcement, analyst Chris Gawler from Goldman Sachs confirmed his Buy rating on the stock. Gawler thinks that while IEL can not be completely immune to the limit on student visas, the company’s focus on “bachelors degrees and above should help insulate it from the overall market impact.”
The analyst added that the overall impact on IEL could be mitigated by students deciding to pursue education in other destinations, such as Australia or the UK. However, this transition might not be immediate and could occur over the next 1-2 years.
According to TipRanks’ consensus, IEL stock has received a Moderate Buy rating based on a total of four recommendations from analysts. It includes three Buys and one Sell rating. The IDP share price forecast is AU$24.13, which is 16.5% above the current trading levels.
