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BofA sees Equifax stock potential in mortgage rebound

EditorEmilio Ghigini
Published 05/07/2024, 11:44
EFX
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On Friday, BofA Securities maintained a positive stance on Equifax (NYSE:EFX) stock, reaffirming a Buy rating and a price target of $255.00. The firm's outlook comes ahead of Equifax's second-quarter earnings report scheduled for July 17, after market close, with a conference call to follow at 8:30 am ET on July 18.

The discussion surrounding Equifax has grown more heated as the year has progressed. Optimistic investors are anticipating a rebound in the mortgage market, which is expected to benefit the company.

On the other hand, pessimistic investors doubt the strength of the recovery, citing potential challenges such as heightened competition in the income and employment verification sector and skepticism that mortgage volumes will return to the levels seen from 2015 to 2019.

BofA Securities has expressed a belief that the potential for a $4 increase in earnings per share (EPS), prior to any additional pricing adjustments, is not yet reflected in Equifax's stock price. However, the firm has slightly reduced its EPS estimate for the year 2025, bringing it down by 0.5% to a range of $7.49 to $9.74, due to a more conservative view of the mortgage market's trajectory.

This rating reiteration by BofA Securities underscores their expectation that Equifax will continue to perform well, despite the cautious adjustment to future earnings projections. Investors will be looking to the upcoming earnings report to provide further insight into the company's financial health and market position.

In other recent news, Equifax has been making significant strides in its operations and leadership structure. The company recently appointed Chad Borton as the new Executive Vice President and President of Workforce Solutions, succeeding Rudy Ploder. This change is expected to bolster the growth and innovation of Workforce Solutions, especially with the integration of the Equifax Cloud.

In addition, Equifax expanded its board of directors with the election of Barbara Larson, former CFO of Workday (NASDAQ:WDAY). Her financial expertise will likely play a key role in supporting the company's strategic initiatives, including the development of products through Equifax Cloud and EFX.AI.

However, Equifax's stock price target was recently revised by Citi, which decreased its estimated adjusted EBITDA for the company in 2024. Despite this, Citi maintains its Buy rating on the company's shares, expressing confidence in a potential improvement in the mortgage market by 2025.

Furthermore, Equifax introduced Forms HQ, a feature within its PeopleHQ™ portal designed to streamline HR processes by automating the delivery, completion, and tracking of essential employee documents.

Lastly, Oppenheimer adjusted its price target on shares of Equifax following the company's recent earnings report, which posted an adjusted EPS of $1.50, surpassing both Oppenheimer's estimates and the consensus. Despite this, Oppenheimer maintains its Outperform rating on the stock.

InvestingPro Insights

As Equifax (NYSE:EFX) gears up for its second-quarter earnings report, investors are keen to understand the company's valuation and performance metrics. With a market capitalization of $29.72 billion and a high Price/Earnings (P/E) ratio of 53.45, Equifax is trading at a significant earnings multiple, indicating high expectations from the market. The company's impressive gross profit margin of 55.49% over the last twelve months as of Q1 2024 reflects its ability to maintain profitability, which is further supported by its history of dividend payments for 54 consecutive years.

Equifax's commitment to shareholder returns is evident, but it's important to note that short-term obligations currently exceed liquid assets, which could pose a liquidity risk. With the next earnings date set for July 17, 2024, and analysts predicting profitability this year, the upcoming report is a critical moment for investors to watch. For those seeking deeper insights, there are over 10 additional InvestingPro Tips available, which can be accessed with the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at https://www.investing.com/pro/EFX.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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