Citi has upgraded Experian PLC (LSE:EXPN) to 'buy', citing overlooked margin expansion potential in the group’s North American division. The broker raised its target price to £39.07, sending shares in the credit data group up 2.4% to 3,316p in Friday trading.
Experian has de-rated sharply since its full-year results on 14 May, falling from around 29 times forward earnings to 22.3 times, according to Citi, largely due to investor concerns over the impact of artificial intelligence on the business.
However, the bank said Bloomberg consensus forecasts only 30 to 45 basis points of annual adjusted earnings margin growth for North America through financial years 2026 to 2028.
Citi believes the unit could deliver 90 basis points in margin improvement in 2026, followed by 70 basis points annually in the two years after.
It sees this being driven by a recovery in the US mortgage market, productivity gains aided by artificial intelligence, and cost savings from eliminating duplication. These factors could support total margin gains of 200 to 300 basis points.
Citi’s estimate for adjusted profit before tax in 2028 is $2.85bn, around 2% ahead of consensus.