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Equifax Stock Could Rise on Strong Results, New Agreement
Stock Analysis & Ideas

Equifax Stock Could Rise on Strong Results, New Agreement

Consumer credit reporting agency Equifax, Inc. (NYSE: EFX) collects and aggregates information on over 800 million consumers and more than 88 million businesses worldwide. This data is used by financial institutions, companies, employers, and government agencies to make critical decisions. Additionally, the company offers credit monitoring and fraud prevention services.

Equifax operates or has investments in 25 countries in North America, Central and South America, Europe, and the Asia Pacific region. Further, it has a team of more than 13,000 employees across the world.

Recent Developments

Recently, Equifax signed an agreement with a supply chain risk management firm, Interos, to provide comprehensive supplier risk assessments to businesses.

Under the terms of the agreement, the companies will make use of data-driven technology to offer a 360-degree view to companies of their partners and suppliers to map, monitor and model supply chain risks in real-time.

William Phelan, the General Manager of the Equifax United States Information Solutions (USIS) Commercial business, said, “By harnessing the power of differentiated business data that ‘Only Equifax’ can provide in combination with Interos’ expertise in analyzing supply chains continuously and in real-time, our customers can realize greater confidence in their supplier relationships. Additionally, our customers can monitor the health of their suppliers to highlight potential business disruptions before they occur, to stay out in front of problems.”

Q1 Results

Last week, Equifax reported strong results for the first quarter of 2022. Revenue grew more than 12% year-over-year to a record $1.36 billion, beating the Street’s estimate of $1.33 billion. Adjusted EPS increased 13% to $2.22, exceeding analysts’ expectations of $2.16 per share.

Mark W. Begor, the CEO of Equifax, said, “We delivered a very strong first quarter, with our ninth consecutive quarter of double-digit revenue growth. Our first-quarter revenue of $1.363 billion was the highest quarterly revenue in our history, up 12% despite the 24.5% decline in the U.S. mortgage market.”

“Despite our very strong first quarter, we are adjusting our full-year 2022 guidance principally to reflect the impact of the large and rapid increase in U.S. mortgage rates over the last several months, with rates now at a 10-year high,” Begor added.

Outlook

In the second quarter, the Georgia-based company expects revenue to range from $1.31 billion to $1.33 billion, and adjusted EPS between $1.98 and $2.08.

For full-year 2022, revenue and adjusted EPS are projected to be in the ranges of $5.15 billion to $5.25 billion and $8 to $8.30, respectively.

Analysts expect the company to post revenues of $5.29 billion and adjusted earnings of $8.63 per share.

Wall Street Weighs In

Following the announcement of the first-quarter results, Evercore ISI analyst David Togut downgraded the rating on the stock to Hold from Buy and lowered the price target to $200 from $340 (3.1% downside potential).

In a research note to investors, Togut said, “Rapidly declining U.S. mortgage market inquiries substantially reduce the company’s outlook for 2022 and 2023 earnings.”

Additionally, George Tong of Goldman Sachs (NYSE: GS) maintained a Hold rating on Equifax and reduced the price target from $255 to $221 (7.1% upside potential).

“The rapid uptick in interest rates has a particularly pronounced impact on Equifax due to its elevated ~30% revenue exposure to the mortgage vertical,” Tong told investors in a research note.

Based on 10 Buys and four Holds, the stock has a Moderate Buy consensus rating. EFX’s average price target of $249.86 implies 21.1% upside potential from current levels.

Investors’ Stance

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Equifax, as 11.8% of investors on TipRanks increased their exposure to the stock over the past 30 days.

Conclusion

The deal with Interos and robust first-quarter results come as a huge positive for EFX stock, which has declined 13.8% in the past three months, 25.4% in the last six months and almost 9% in the past year.

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