On Wednesday, CFRA, a financial research firm, increased its price target for Experian Plc (LON:EXPN:LN) (OTC: EXPGY (OTC:EXPGY)) to GBP41.00, up from the previous GBP39.00. The firm has maintained its Buy rating on the stock. The adjustment reflects a forecasted price-to-earnings (P/E) ratio of 33 times for the fiscal year ending March 2025, which aligns with the average P/E ratio of Experian (OTC:EXPGF)'s industry peers.
Experian's financial results for the fiscal year 2024 met CFRA's expectations, with organic revenue growth reported at 6% and a benchmark EBIT margin improvement of 10 basis points. Notably, the company experienced a stronger performance in the fourth quarter, where organic revenue growth accelerated to 8%, compared to the 5%-6% growth range seen in the first three quarters. This increase was primarily driven by Experian's North American operations, while the Latin American market also reported robust growth of 13%.
Looking ahead to the fiscal year 2025, Experian has provided guidance for organic revenue growth between 6%-8% and anticipates a margin improvement of 30-50 basis points. CFRA's analysis supports this outlook, projecting revenue growth of 6%-7% for the fiscal years 2025 and 2026. The firm attributes this positive trajectory to structural growth opportunities in Latin America and a resilient portfolio mix, which includes a higher exposure to Tier 1 lenders that could help buffer against macroeconomic uncertainties.
The financial research firm also notes the potential for margin improvement, which could be facilitated by operating leverage in Latin America and the outcomes of Experian's ongoing transformation program. In light of these factors, CFRA has adjusted its earnings per share (EPS) estimate for the fiscal year 2025 to USD1.57, up from USD1.55, and has introduced a new EPS estimate of USD1.72 for the fiscal year 2026.
InvestingPro Insights
As Experian (EXPGY) garners attention with its solid performance and optimistic revenue growth projections, real-time data from InvestingPro provides a deeper financial perspective. The company boasts a market capitalization of $43.22 billion, reflecting its significant presence in the industry. However, investors should note that Experian is trading at a high P/E ratio of 41.95, which is substantial when compared to the near-term earnings growth, indicating a premium valuation. Despite this, the company's long-standing history of dividend payments, which have been maintained for 45 consecutive years, showcases its commitment to shareholder returns.
With a P/E ratio (adjusted for the last twelve months as of Q2 2024) at 41.94 and a Price/Book ratio of 10.38, Experian is positioned at the higher end of valuation metrics. This is also reflected in the PEG ratio of 5.22, suggesting that the stock's price may be outpacing earnings growth. Nonetheless, the company's stock has shown low price volatility, which might appeal to investors looking for stability.
For those interested in further insights, InvestingPro offers additional tips, including details on Experian's moderate level of debt and its high EBITDA valuation multiple. Subscribers can explore these aspects and more to inform their investment decisions. To gain full access to these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are 13 more InvestingPro Tips available that could help investors understand Experian's financial health and stock potential.
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