On Friday, Jefferies, a global investment banking firm, revised its stance on IDP Education (IEL:AU) (OTC: IDPUF) shares, lowering the price target to AUD15.00 from the previous AUD15.80. The firm has maintained an Underperform rating on the stock.
The adjustment follows reports suggesting that Australian universities may experience a significant drop in international student enrolments due to potential changes in the country's net overseas migration (NOM) policies.
The Australian Financial Review (AFR) has reported that the government, along with the coalition, is considering reducing NOM by focusing more on permanent migration rather than temporary student visas.
This shift in policy could result in a 60% to 95% decrease in international student numbers at Australian universities, which would have direct implications for companies like IDP Education that are involved in international student placements.
Jefferies conducted its own analysis, which supports the AFR's findings on the potential impact of the policy proposals. The firm estimates that if such policies were to be implemented, there could be over a 50% downside risk to IDP Education's consensus earnings for the financial years 2025-2026.
The investment bank's report highlights the importance of international students to Australian education providers and the potential financial impact of policy changes on these institutions. Jefferies' analysis suggests that IDP Education's financial performance could be adversely affected by the proposed migration policy adjustments.
In summary, Jefferies has retained its Underperform rating on IDP Education, anticipating that the company may struggle in the face of the Australian government's potential policy changes aimed at reducing the intake of international students. The firm's revised price target reflects these concerns and the possible earnings risk for the upcoming financial years.
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