Needham cuts Equifax stock price target to $300, retains buy rating

On Thursday, Needham analysts revised their price target for Equifax shares, reducing it to $300 from the previous $325, while reaffirming their Buy rating on the stock. Currently trading at $248.48, Equifax shows high valuation multiples across key metrics according to InvestingPro data, with a P/E ratio of 54.9x. The adjustment follows Equifax’s fourth-quarter earnings, which fell short of Wall Street’s revenue expectations. The miss was attributed to a decline in mortgage volumes, a slowdown in hiring, and foreign exchange headwinds.

Equifax’s earnings per share (EPS) exceeded forecasts, but this was primarily due to a lower tax rate rather than improved core margins. The company maintains impressive gross profit margins of 55.53% and generated revenue of $5.59 billion in the last twelve months. Needham’s analysis pointed out that although the results were underwhelming, they aligned with broader economic indicators. High mortgage rates and sluggish white-collar employment were noted as ongoing challenges.

Despite these issues, Needham anticipates Equifax’s resilience, highlighting the company’s efforts to expand its Employment and Wage Services (EWS) records, implement price increases, and launch new products. Furthermore, Equifax is expected to enhance shareholder value through increased capital returns, potentially via a raised dividend or a share buyback program. These actions are seen as potential positive drivers for Equifax’s stock.

Needham’s commentary underlines that while the near-term headwinds have necessitated a lower price target, the outlook for Equifax remains optimistic. The firm’s analysts believe that the company’s strategic initiatives will help navigate the current economic climate and support the stock’s performance going forward.

In other recent news, Equifax Inc (NYSE:EFX). reported its fourth-quarter earnings, slightly surpassing analyst estimates with an adjusted earnings per share of $2.12, compared to the projected $2.11. Revenue for the quarter reached $1.42 billion, a 7% YoY increase, albeit slightly below the anticipated $1.44 billion. A significant contributor to this performance was the robust growth in the company’s U.S. mortgage business, which saw a 29% YoY revenue surge.

However, Equifax’s guidance for 2025 fell short of expectations, causing some concerns. The company forecasts a full-year 2025 adjusted EPS of $7.25 to $7.65, considerably lower than the $8.74 consensus. Revenue guidance for the same period is between $5.89 billion and $6.01 billion, also below the expected $6.28 billion.

This outlook reflects an anticipated 12% decline in U.S. mortgage hard credit inquiries, hinting at potential challenges in the U.S. housing market that may continue to affect Equifax’s mortgage-related business. For the first quarter of 2025, Equifax expects adjusted EPS between $1.33 and $1.43 and projects Q1 revenue of $1.39 billion to $1.42 billion, both falling short of analyst forecasts. These recent developments provide insight into Equifax’s current performance and future expectations.

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