Jefferies downgrades Experian to 'hold'
Jefferies downgraded credit checking company Experian to 'hold' from 'buy' and cut the price target to 1,550p from 1,670p following the company's preliminary full-year results on Thursday.
Although increased innovation should help the group to grow at least in line with end markets, Jefferies pointed out that US credit momentum is slowing and said it is unclear whether Consumer Services can revive after more than two years of disruption.
Jefferies said that while it was expecting an eventual slowdown in North American credit growth, the moderation occurred sooner than expected. It added that revenue growth in North American Consumer Services was at the bottom of the guidance range.
"We see limited near term upside to estimates without acquisitions and, with valuation multiples at cycle highs, there is no longer enough upside to merit a buy."
The bank cuts its full-year 2018 earnings per share estimate to 100.20 cents from 102.90 cents as disappointing cross-channel marketing disposal proceeds have reduced surplus capital.
Jefferies said more M&A was likely. Experian announced a $600m share buyback on Thursday and the bank reckons$500m of that will be spent on acquisitions.
At 1043 BST, the shares were down 2.5% to 1,619p.