What the bad jobs report means for markets
On Thursday, Equifax Inc . (NYSE:EFX) stock rating was upgraded by RBC Capital Markets from Sector Perform to Outperform, with the firm setting a new price target of $300.00. The upgrade was primarily based on the anticipation of a mortgage recovery and the impact of FICO price increases on revenue growth. Based on InvestingPro data, Equifax currently trades at a P/E ratio of 49.45, suggesting a premium valuation relative to its peers. The stock has shown resilience with a 2.34% gain over the past week, despite being down 18.74% over six months.
According to RBC Capital Markets, Equifax is expected to benefit from an expanding total addressable market (TAM) through significant growth and adoption in their Verification services. This growth is predicted to outpace the industry average. In addition, a resurgence in non-mortgage lending activity is likely to contribute to the company’s positive outlook. The company has demonstrated solid performance with revenue growth of 7.9% in the last twelve months and maintains impressive gross profit margins of 56.55%.
The analyst also noted the strategic advancements Equifax has made with its cloud migration efforts. These advancements are believed to strengthen EFX.AI, which leverages The Work Number (TWN), credit data, and an extensive range of alternative data to increase the company’s market share.
Another factor contributing to the upgraded rating is the expected improvement in Equifax’s financial performance. Transaction (JO:NTUJ) growth combined with cost savings from cloud operations are anticipated to lead to significant margin expansion. Furthermore, strong free cash flow (FCF) growth and a shareholder-friendly capital allocation strategy are projected to yield solid double-digit earnings growth.
RBC Capital Markets’ outlook on Equifax reflects confidence in the company’s potential for accelerated growth and enhanced profitability in the near future, supported by strategic initiatives and favorable market conditions.
In other recent news, Equifax Inc. reported its Q4 2024 earnings, which showed a mixed performance. The company’s earnings per share (EPS) slightly exceeded expectations at $2.12, compared to the forecasted $2.11. However, Equifax’s revenue fell short, coming in at $1.42 billion against the expected $1.44 billion. Despite the EPS beat, the revenue miss led to a negative market reaction. Equifax has plans to enhance its contract compression fleet and focus on energy infrastructure, with a capital expenditure target of $110-$130 million for 2025. Additionally, the company increased its dividend by 50% and is considering share buybacks. In another development, NCR (NYSE:VYX) Atleos Corporation announced the appointment of Traci Hornfeck as its new Chief Accounting Officer, effective March 31, 2025. Hornfeck brings extensive experience from her previous role at Rollins, Inc. (NYSE:ROL) and is expected to contribute to NCR Atleos’ growth as it continues its journey as an independent public entity.
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