BofA Securities reinstates Equifax with Buy, sets $280 target

On Thursday, BofA Securities announced the reinstatement of coverage on Equifax stock (NYSE:EFX), assigning a Buy rating and establishing a price target of $280, representing a potential 25% upside from the current price of $224.44. According to InvestingPro data, analyst targets range from $250 to $315, with the company currently trading above its calculated Fair Value. The move reflects the firm's positive outlook on the company's prospects, driven by several key factors.

According to BofA Securities, the decision to reinstate coverage with a Buy rating is influenced by the improving network effects from Equifax's income and employment verification service, The Work Number. This service has helped drive impressive results, with the company achieving a 7.9% revenue growth and maintaining strong gross profit margins of 56.5% in the last twelve months. This service is seen as a significant contributor to the company's growth and market position.

The firm also cites a strategic shift at Equifax, moving away from rebuilding its infrastructure towards a focus on new product innovation. This change in direction is expected to open up additional opportunities for the company and drive further growth.

Additionally, BofA Securities points to the potential benefits of a normalizing mortgage market, which could provide additional value to Equifax. The analyst's comments suggest a belief that the market's recovery will positively impact the company's performance.

Equifax has been working on enhancing its offerings and market reach, and the recognition from BofA Securities underscores the firm's confidence in the company's direction and potential for growth. With a price target set at $280, BofA Securities signals its belief in Equifax's capacity to achieve significant value for its shareholders in the foreseeable future.

The reinstatement of coverage and the establishment of a Buy rating by BofA Securities is a notable development for Equifax, as it reflects the firm's analysis and expectations for the company's financial performance and strategic initiatives.

In other recent news, Equifax Inc . reported its Q4 2024 earnings, with earnings per share slightly surpassing expectations at $2.12 compared to the forecasted $2.11. However, the company experienced a revenue shortfall, reporting $1.42 billion against the anticipated $1.44 billion. This revenue miss led to a downgrade from Barclays (LON:BARC), which adjusted Equifax's stock rating from Overweight to Equal Weight and reduced the price target to $260. Conversely, RBC Capital Markets upgraded Equifax's stock to Outperform, setting a new price target of $300, citing the potential for a mortgage recovery and revenue growth from FICO price increases.

S&P Global Ratings revised Equifax's outlook to stable from negative, affirming its 'BBB' ratings due to improved credit metrics and leverage reduction. The company's leverage fell to 3.2x, with expectations to decrease further to 3.0x by the end of 2025. Equifax's Workforce Solutions segment, which saw a 5% revenue increase in 2024, is projected to continue its growth trajectory. The company's cloud technology transformation is nearly complete, which is expected to enhance new product rollouts.

Equifax's mortgage-related business, accounting for 20% of total revenue, grew by 13% in 2024 despite rising interest rates, with growth expected to persist through 2025. The company also plans to increase its dividend for the first time since 2017 and resume share repurchases, supported by an anticipated annual free cash flow of $900 million to $1 billion. These developments reflect Equifax's strategic focus on sustaining revenue growth and maintaining financial stability.

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