BofA Securities analyst Heather Balsky has upgraded the shares of Equifax Inc (EFX) from Underperform to Buy and raised the price target from $164 to $300. The stock has seen a 40% increase since the November 1 Federal Reserve meeting, outperforming the S&P 500’s 11% gain. Balsky believes there is further room for growth due to positive earnings per share (EPS) revisions.
Currently, Equifax shares are trading at 21 times the analyst’s estimated EPS for 2025. However, the stock has historically traded at an average multiple of 24 times over the past five years, reaching as high as approximately 32 times. Balsky’s revised price target of $300 assumes a multiple expansion of 6 times to 27 times as EPS improves and more investors recognize the potential profitability in 2025.
Balsky’s analysis assumes an increase in mortgage originations and inquiries of 9-16% and 15-20%, respectively, for 2024 and 2025. This projection is based on expectations of easing Treasury rates and mortgage spreads. The analyst’s Structured Finance team predicts a scenario where mortgage rates fall from over 7% in 2023 to 6.0% by the end of 2024. With an average rate of 6.4%, the team estimates a potential rise of 16-18% in originations for 2024.
The analyst anticipates positive EPS revisions for Equifax over the next two years, which could generate increased investor enthusiasm. Additionally, the company’s USIS cloud transformation is expected to contribute to gaining wallet share, providing further upside potential.
As of the latest check on Monday, EFX shares were trading higher by 3.73% at $245.85.
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