Equifax's Cloud Not A Moat, Analyst Says In Downgrade Slashing Estimates

Bank of America Securities (BofA) on Monday downgraded Equifax, Inc. EFX underwhelmed by the company’s investor day that happened last week.

The company has outlined its long-term financial framework, projecting an 8%-12% revenue growth rate, with 7%-10% of that being organic and mergers and acquisitions (M&A) contributing roughly 1%-2%.

The company also anticipates cash EPS growth of 12%-16% and an annual shareholder return of 13%-18%.

Also Read: Equifax Doubles Down On Growth Plan Despite Mortgage Market Woes

During its first-quarter earnings release, Equifax guided fiscal 2025 revenues between $5.91 billion and $6.03 billion, versus a consensus of $5.96 billion and prior guidance of $5.89 billion to $6.01 billion.

The company expected adjusted earnings of $7.25-$7.65 per share versus consensus of $7.48.

Equifax sees second-quarter sales of $1.49 billion-$1.53 billion compared to the consensus of $1.5 billion and adjusted EPS of $1.85-$1.95 versus the consensus of $1.89.

Analyst Joshua Dennerlein reduced the company’s 2025 adjusted EPS estimates to $7.58 from $7.63 and its 2026 estimates to $8.91 from $9.22, reflecting tempered growth expectations.

The analyst wrote, “We were disappointed that EFX did not revise its long-term growth outlook. The long-term framework was originally provided at its 2021 investor day. EFX underperformed these targets given delays in the cloud platform migration & the mortgage market slowdown.”

BofA downgraded the company from Buy to Neutral, lowering its price forecast to $285 from $300.

BofA Securities cited three key factors for downgrading the stock. The primary concern is that Equifax’s transformation to a cloud-native platform does not represent a long-term competitive moat for the company.

BofA noted that Equifax’s future growth would instead depend on product innovation leveraging its unique data assets, which the company expects will drive growth back to its unrevised long-term outlook.

BofA Securities also highlighted that a mortgage market recovery would be the “real kicker” to Equifax’s growth prospects, but the timing is highly uncertain.

Price Action: EFX stock is trading lower by 1.65% to $251.47 at last check Monday.

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