Experian PLC (LON:EXPN) dipped in mid-morning trading Monday after Deutsche Bank downgraded the stock to ‘sell’ from ‘hold’ amid a deterioration in its US growth outlook.
In a note, the German bank said it believed the shares were “overvalued” for its forecasts, which are expecting the FTSE 100 consumer credit reporter’s growth to “moderate” in the next 12 months.
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Analysts forecast that organic growth for the firm would be around 5% for the 2020 fiscal year, down from 8% in 2019, with the slowdown likely to continue until a recession began.
A key element of this was “increasingly unsupportive” data for the US market, which generates 60% of Experian’s sales, with increased loan defaults (or delinquencies) continuing alongside an employment outlook that was likely to “deteriorate further”.
“The US economy is not as strong as it was, in our view,” said Deutsche’s analysts.
Despite the rating downgrade, the bank did retain its 1,800p price target and only made “minor changes” to their earnings forecasts, although it cautioned that this target carried a 10% downside risk.
The US market has been in sharp focus since Friday, after it added just 20,000 jobs in February, the lowest rise in 17 months and well below the expected figure of 180,000, compounding fears of a brake on global economic growth.
Experian shares were down 0.8% at 2,004p.