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Credit given: UBS raises stance for Experian to 'buy' ahead of trading update

In a note to clients, the UBS analysts said: “We believe 2018 will likely see Experian start to accelerate organic growth from c4% back towards >7%, for the first time since 2013”
Credit checking
The Swiss bank's analysts also raised their price target for Experian to 1,900p from 1,630p

UBS has upgraded its rating for Experian Group PLC (LON:EXPN) to ‘buy’ from ‘neutral’ ahead of a third quarter trading update from the credit checking firm due on January 18, saying it expects a return to organic growth of more than 7% in the next few years.

In late morning trading, the FTSE 100-listed firm’s shares were 1.2%, or 20.5p higher at 1,669.5p, with the Swiss bank also raising its price target for the stock to 1,900p from 1,630p.

READ: Experian sees spike in enrolments after data breach at Equifax as it reports first half profit growth

In a note to clients, the UBS analysts said: “We believe 2018 will likely see Experian start to accelerate organic growth from c4% back towards >7%, for the first time since 2013.”

They added: “The key factor, in our view, will be B2C swinging from negative into positive growth, but we also expect help from new B2B contracts and upside in Latam.”

The analysts said the trends may be unchanged for the third quarter, but expects improvement to 6% growth for the fourth quarter of 2017 and see 7%-8% growth for full year 2020.

READ: Stronger headwinds to slow growth at Experian, Morgan Stanley says

Ahead of this expected pick-up, the analysts raised their earnings per share forecasts for Experian, taking them to around 8% ahead of full year 2020 consensus.

They said that, having underperformed since September 16, Experian shares currently trade on a price/earnings ratio of 21 times 2019 estimates, only around a 45% premium to the market against a premium of around 80% last time growth reached  over 7%.

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