Why fund managers are still watching IDP Education's cost-out story

Cost cuts and a buy-back have propped up the balance sheet, but Australian, UK and Canadian visa settings remain the deciding factor for a re-rating.

3 Jul 2026 · 6 min read

Fund managers covering IDP Education are still waiting for the international student cycle to turn, even as the stock trades near a decade low. Atlas Funds Management noted in a July 2026 Article that the company's shares were down 94% from their 2021 peak, with the fund remaining cautious given no visibility into whether government policy on student visas would loosen. A month earlier, Pendal Group's June 2026 Newsletter pointed to a partial silver lining: improved cash collection had strengthened the balance sheet to around 1x net debt to EBITDA, and the company had launched a $50 million buy-back, even though it declined to give an outlook for next year's student volumes.

A cost-out story waiting on a demand recovery

The thesis that has kept several managers holding through the downturn rests on IDP's ability to control costs while it waits for visa settings in Australia, the UK and Canada to ease. ECP Asset Management has tracked this closely through 2025 and 2026, noting in its May 2026 Monthly Report that IDP would keep cutting costs into FY27 in response to weak visa data, protecting margins while rightsizing the business to current trading conditions. Forager Funds, a long-time holder, used its June 2026 Annual Report to describe the environment as an extremely difficult, anti-immigration one that had not improved, with volumes decimated in Canada and pummelled in the UK, though it pointed to pricing outperformance and an IELTS launch in China as levers still available to management.

If we get an improvement in political conditions in any of IDP's major markets, or even just a return to the historical trend of structural growth off this lower base, we think there's upside for earnings that should be reflected in the share price over time.

— Auscap Asset Management, Presentation, March 2026

Auscap Asset Management laid out the fuller case in a March 2026 Presentation, describing IDP's two divisions, IELTS testing and student placement, as businesses that had swung from record profitability in 2023 and 2024 to a political reset across all four of its major markets. Auscap pointed to a 15% yield increase in the student placement business and a further $5 million upgrade to full-year guidance as evidence that disciplined cost control was already showing through, even with revenue still soft.

What managers are watching next

Paradice Investment Management summed up where sentiment sits heading into the second half of 2026: the stock fell 44% over its June 2026 quarter despite a strong first-half result in February, as policy tightening in key destination markets drove material earnings downgrades. Paradice has not added to its position, acknowledging the recovery timeline has extended, but still assesses the stock as attractive at current levels. With guidance reaffirmed and the buy-back underway, managers are now watching visa data out of Australia and the UK, and the pace of IELTS test volumes in China, for the first real signs that the multi-year downgrade cycle is ending.