On Wednesday, Citi adjusted its outlook for Equifax Inc . (NYSE:EFX), a consumer credit reporting agency, by lowering its stock price target from $305.00 to $263.00. Despite the reduction, Citi has kept a Buy rating on the company's shares.
The revision follows a reassessment of Equifax's first quarter of 2024, which takes into account a tougher mortgage market forecast. Citi has reduced its estimated adjusted EBITDA for the company in 2024 from $2,012 million to $1,885 million. Additionally, the adjusted diluted earnings per share (EPS) forecast has been decreased from $7.92 to $7.20.
Looking ahead to 2025, Citi's estimated adjusted EPS of $9.86 for Equifax is approximately 5% higher than the Visible Alpha consensus. The firm expresses confidence that the mortgage market will show improvement in 2025.
The new target price reflects the lowered earnings forecasts. Citi's analysis suggests that if the mortgage market were to return to the norms seen from 2015 to 2019, Equifax's adjusted EBITDA and EBIT for 2024 could potentially be about 41% and 52% higher, respectively, than the current forecast.
Furthermore, Citi estimates that, based on normalized mortgage market earnings, Equifax would trade at a discount to its key peer Experian (OTC:EXPGF) when evaluated on an enterprise value to adjusted EBITDA basis.
InvestingPro Insights
In light of Citi's revised outlook for Equifax Inc. (NYSE:EFX), the InvestingPro platform offers additional context that could be valuable for investors considering the company's prospects. According to InvestingPro data, Equifax currently has a market capitalization of $27.92 billion and trades at a price-to-earnings (P/E) ratio of 49.43, which adjusts to 47.51 for the last twelve months as of Q1 2024. This high earnings multiple suggests that investors have high expectations for the company's future earnings growth.
One of the standout InvestingPro Tips is Equifax's impressive gross profit margins, which have been reported at 55.49% for the last twelve months as of Q1 2024. Another notable tip is the company's consistent dividend payments, having maintained them for 54 consecutive years, offering a current dividend yield of 0.7%.
Still, analysts have tempered their enthusiasm somewhat with 14 analysts revising their earnings downwards for the upcoming period, indicating potential headwinds or a more cautious outlook on the company's earnings potential.
For investors seeking a deeper analysis, there are an additional 11 InvestingPro Tips available at https://www.investing.com/pro/EFX. These insights could provide a more nuanced understanding of Equifax's financial health and market position. Additionally, using the coupon code PRONEWS24, readers can obtain an extra 10% off a yearly or biyearly Pro and Pro+ subscription to InvestingPro, unlocking a wealth of financial data and expert analysis to inform investment decisions.
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