Equifax Inc. Just Reported And Analysts Have Been Lifting Their Price Targets – Simply Wall St News

Investors in Equifax Inc. (NYSE:EFX) had a good week, as its shares rose 4.7% to close at US$163 following the release of its annual results. Revenues of US$3.5b arrived in line with expectations, although statutory losses per share were US$3.30, an impressive 42% smaller than what broker models predicted. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Equifax

NYSE:EFX Past and Future Earnings, February 15th 2020

Following the latest results, Equifax’s 17 analysts are now forecasting revenues of US$3.71b in 2020. This would be a credible 5.9% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Equifax forecast to report a statutory profit of US$3.93 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.72b and earnings per share (EPS) of US$4.14 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.

Although analysts have revised their earnings forecasts for next year, they’ve also lifted the consensus price target 10.0% to US$165, suggesting the revised estimates are not indicative of a weaker long-term future for the business. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Equifax, with the most bullish analyst valuing it at US$190 and the most bearish at US$136 per share. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that analysts are expecting a continuation of Equifax’s historical trends, as next year’s forecast 5.9% revenue growth is roughly in line with 7.2% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 5.7% next year. It’s clear that while Equifax’s revenue growth is expected to continue on its current trajectory, it’s only expected to grow in line with the market itself.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Equifax. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Equifax going out to 2022, and you can see them free on our platform here..

You can also view our analysis of Equifax’s balance sheet, and whether we think Equifax is carrying too much debt, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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