Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Experian slumps after Jefferies downgrades on Trump uncertainty and Brazil financial scandal

Jefferies expects Experian to spend US$500mln on acquisitions after carrying out a share buyback
Donald Trump
US President Donald Trump has created uncertainty over his fiscal policy

Experian plc (LON:EXPN) shares dove after Jefferies cut its rating on the credit checking agency, lowered its target price and slashed its earnings forecast, citing a slowdown in US credit and uncertainty in Brazil.

Shares fell 2.29% to 1,622.0p in morning trading. 

The company yesterday reported a pre-tax profit of US$1.07bn for the year to 31 March, compared to US$966mln the previous year, with revenue rising to US$4.34bn from US$4.24bn.

However, Jefferies joined analysts in voicing concerns over political uncertainty over US President Donald Trump's policies and a financial scandal in Brazil where President Michel Temer is embroiled in bribery allegations. 

The bank reduced its rating to ‘hold’ from ‘buy’ and bumped down its target price to 1,550p from 1,670p. It also cut is earnings per share estimate for 2018 by 3%.

“Although we anticipated an eventual slowdown in North American credit growth the moderation occurred sooner than expected,” Jefferies warned. 

On Brazil, Jefferies said while it has seen improvement in the full year the outlook remains uncertain.

At the company’s full year results, Experian also announced a US$600mln share buyback to reduce capital and allow it to allocate more cash over the next 12 months.  Jefferies thinks a large chunk of this will be spent on acquisitions.

“In our view, Experian has US$1.1bn surplus capital to deploy in fiscal year 2018 but could stretch to US$1.8bn if management push leverage to the top of their 2.0-2.5x target range,” Jefferies said.

“Although a US$600m buyback will be executed this year and we believe US$500m will be spent on acquisitions, for modelling purposes we assume the buyback consumes the entire US$1.1bn.”



Register here to be notified of future EXPN Company articles
View full EXPN profile View Profile

Experian Group Timeline

Article
December 04 2009

Related Articles

Yellow car with Ubuntu number plate
February 10 2017
Niche lender S & U had a strong 2016, laying to rest any fears of disruption to the business following the Brexit vote
shutterstock_296360801-(1).jpg
October 20 2016
Panmure said the licence would "move" the group "down the risk curve

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use