First half earnings were ahead of Macquarie’s estimates. The beat on headline net profit reflected gross margin improvement and lower depreciation.
The broker believes the company’s global infrastructure and established relationships in student placement and English-language testing are relatively unique.
This provides barriers to entry for new players and a platform for the company to leverage what is expected to be strong rates of industry growth. Outperform rating retained. Target rises to $4.70 from $4.67.
Sector: Consumer Services.
Target price is $4.70.Current Price is $4.37. Difference: $0.33 – (brackets indicate current price is over target). If IEL meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).