I spent all this morning trying to work out why IDP Eduction shares fell over 20% in early trade, to an all time low of $2.08 per share. I even sent an email off to IDP Education’s investor relations asking if there was any news we should know about as investors. I’m still waiting on a reply to that one.

I had ChatGPT combing the internet for clues and I found nothing.

I was bewildered until 2pm. Then I found a note out of Macquarie shared by Cameron England from The Motley Fool, and then IEL was ‘The Stock of the Day’ on “The Call”. Here’s a summary from the Motley Fool:

The Motley Fool report

IDP Education shares fell well below Macquarie's own price target of $2.35, dropping 20.3% on heavier than usual volume to be changing hands for $2.12, after hitting a new 12-month low of $2.08. The shares have traded as high as $7.97 during the past 12 months.

Macquarie said there were numerous headwinds for the company including a stronger Australian dollar, weaker visa volumes across Australia, the UK, and Canada, and soft demand signals for English education as evidenced by lower Google searches for the IELTS test across India and China. 

IELTS is the dominant test used to evaluate English proficiency.

Macquarie added: 

While the China IELTS rollout is progressing well, with test centres rising to 13 across 9 provinces, this is insufficient to offset broader weakness. Further, while we expect IEL could announce additional cost-out in response to topline pressures, we estimate IEL would be required to achieve additional $25m net cost reduction on top of the $25m already announced for FY26E to reach Consensus FY27 EBIT. We view this as challenging given lower-hanging cost-out opportunities (e.g., project spend) have already been captured.

Macquarie said there was a risk of further downside in FY26 and downgrades to the outlook for FY27.

They added: 

While our FY26 EBIT of $120.0m is at the bottom-end of FY26 guidance of $120-130m, we see downside risk here due to foreign exchange headwinds and given our volume estimates are more optimistic than current indicators imply. We see significant downside risk to FY27.

The Macquarie price target was cut by more than half, down from $5.45 previously to $2.35.

They added:

While we view IEL's long-term thesis to be intact, as both foreign student demand should return, and policy setting should improve given university and population growth reliance on students, we see near-term earnings headwinds.

IDP has not made any comment regarding its business outlook since the release of its first-half results in February, when it upgraded its full-year guidance from EBIT of $115 to $125 million to $120 to $130 million. 

Managing Director Tennealle O'Shannessy said at the time the company was pleased with the first-half performance, "with the team executing well across the business whilst also progressing our transformation program at pace''. 

ENDS

And this is what Jun Bei Liu had to say on “The Call”

From The Call from ausbiz: the call: Friday 29 May, 29 May 2026

https://podcasts.apple.com/au/podcast/the-call-from-ausbiz/id1506523664?i=1000770111889&r=404

“Yeah, so I spoke to, sorry, I spoke to the company, I spoke to Macquarie. So, I think the downgrade is particularly recently, a lot of visa has been rejected. So, I don't know if it's come from the top, or maybe just the quality of the student application.

So, there's high rejection that's coming through at the moment. So, that's why Macquarie came through and say, look, it's actually looking very weak. But speaking to the company, it's actually because IDP is high quality operator, so their application is a little bit higher than the rest of the industry.

So, they have said that there's really not much change from what it was. So, things are still tracking as expectations. So, potentially, there's no downgrade as the market is indicating.

I think, tactically, it's a buy for a total of 16% on that downgrade. People really worry about earnings downgrade, and I think the downgrade is probably not going to eventuate. However, if you're going to take a longer-term view of what's happening though, this company is really impacted by all the government's outlook for population growth.

“Now, Australia has been talking about trying to curb population. The easiest way to curb population is students. So, unfortunately, I think every country is still going through it, whether it's UK, it's here.

I think Canada is maybe moving to a little bit more friendly policy.

Well, but it has cracked down on the past three years.

Yeah, exactly. So, I think everyone's looking forward to the change in policy. And unfortunately, that's still going to be very tough for the next 12 to 18 month.

Australia is being the biggest market for them, is going to be tough as well. So, look, tactically, I'm saying you probably got 15% upside here when they don't downgrade. The same things are still tracking okay.

But it just got to watch out all the policies for this company. You know, it used to be market dialing. I just don't see how it can turn very quickly in terms of the outlook.

They're not with the success of like Pauline Hanson and One Nation recently. That's not going to help things if they end up like... Well, that is a global trend, isn't it?

Yeah, absolutely. Against immigration. So, are you calling that then a short-term buy?

It's a short-term buy.”

ENDS

My Take

This was my 3 year pick almost two years ago. It’s not looking too good at this stage, and the way the world is heading with anti globalism and anti-migration policies the turnaround story for IDP Education could be a long way into the future.

I haven’t given up on IEL though. International student education was once one of Australia’s largest exports and I believe it will be again some time in the future. There’s a lot to fix though before IEL gets back to where it was (housing supply is the biggest issue).

IEL has had some serious short selling against it over the past 2 years, although until today, the short positions had dropped off significantly (see graph below):

https://www.shortman.com.au/stock?q=IEL

This is a bottom draw stock for me now. I actually added another tranche today at an average $2.10 per share. If the forecast earnings align with concensus over the next few years IEL could return investors 15% per year from here with 8% of that in dividend. However, if Macquarie’s bearish view turns out to be correct there could be further pain ahead. This might be one to put away for the grandchildren!

Disc held and just added more IRL at today’s lows

Source: Simply Wall Street