Experian PLC (LON:EXPN) extended Monday’s gains this morning as a second broker upgraded its rating for the blue chip credit checking firm ahead of a third quarter trading update due next week.
Following on from yesterday’s a move to ‘buy’ from 'neutral' by Swiss bank UBS, London broker Shore Capital today upped its stance for the FTSE 100-listed firm to ‘buy’ from ‘hold’.
In a note to clients, ShoreCap’s analysts said they believe that it is worth revisiting the data specialist’s interim results, posted on November 15, ahead of the company’s final trading update for its current year to end March 2018, due on January 18.
The analysts said: “The interim results demonstrated known continuing headwinds but also revealed good organic growth across the core of Experian. The outlook statement revealed, to our minds, increasing confidence in the positioning of the group to long-term opportunities in the world of data.”
They added: “The restructuring of lagging business units in Consumer and Marketing is concluding with growth here set to see an improving trend.“
Looking to management guidance on the outlook and extending this out to full year 2020, the analysts said they expect momentum to build with higher group organic revenue growth emerging, growing from the around 4% level seen in the first half towards circa 7%.
They added that Experian’s margins remain stable and they expect this to continue in the mix, while positive cash flow remains a strong feature underpinning valuation metrics.
The analysts concluded that they expect a stronger share price performance to resume in due course, hence the upgrade to buy.
In mid morning trading, Experian shares were 1.1%, or 18.5p higher at 1,668.5p.