IDP Education shares rally as UBS sees 'material upside'
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The news: IDP Education shares gained in morning trade as UBS hiked its 12-month price target on the student placement and English language testing company.
The numbers: IDP shares were up 5.2% to $5.91 at 11:30am AEST, having surged 30% on Thursday following its full-year results. The stock has shed 63.5% over the last 12 months.
UBS retained its 'buy' rating on IDP and raised its price target 58% from $4.95 to $7.80.
The context: UBS analysts said that even by its own conservative forecasts, IDP's "story looks interesting", with "material upside" should it see a earlier-than-expected market recovery.
They noted IDP has endured a "challenging year", with headwinds from government policies across all the company's geographies. However, the analysts said planned cost cuts are "materially bigger" than expected, helping to bridge an earnings gap driven by declining volume growth over the next 18 to 24 months.
IDP — which offers student placements in Australia, New Zealand, the USA, UK, Ireland and Canada — has previously warned that new government policies aimed at reducing migration are impacting student placement volumes across those markets.
The source: UBS research
