Experian (LSE:EXPN) PLC shares fell 2.6% to 2,670p after the credit checking agency guided City scribes to a more cautious outlook on revenue growth and margins prompting analysts to sharpen their pencils and prepare to lower forecasts.
The company said revenue in the year to March 31, 2023, rose by 6% to $6.59bn from $6.22bn the year prior in what the firm called a “year of very strong progress.” That was slightly below City expectations of $6.64bn.
Shore Capital analyst Robin Speakman pointed out for the financial year 2024 he had forecast a like-for-like growth of 7% against guidance provided today of 4% to 6%.
"A more cautious outlook then at this stage, but still good growth in the context of Experian (LSE:EXPN)’s performance over the past few years through the pandemic in achieving constant compounding growth," Speakman noted.
He also highlighted further modest margin accretion is expected through the financial year.
"We expect to ‘shave’ our FY24 forecast assumptions accordingly," he said.
Shore Capital has a buy rating on Experian.
Jefferies agreed. "We think consensus EPS estimates may drift lower from here," the investment bak said.
The broker noted financial year 2024 guidance of organic revenue growth at 4-6% and "modest margin progression" may disappoint the market with the consensus for 5.8% organic growth and a 40 basis point improvement in year on year margin.
Jefferies retained a hold rating.
Steve Clayton, head of equity funds at Hargreaves Lansdown said the firm has "painted an outlook which although rosy is, to be honest, no better than that which the market was already expecting them to paint."
He also noted the group are exposed to the growth of lending appetite amongst US banks, for they sell them the data to identify the best consumers to target with credit offers.
"So, the recent struggles of US regional banks, following the collapse of SVB could hold Experian back a little in the near term," he suggested.
However, he believes the "short term noise like that can create opportunities for long term investors."
Few UK stocks offer such direct exposure to the rising importance of data in the modern economy.