Why Equifax Inc. Shares Will Leap to $80

Does this analyst make a good case? Or from is it just more noise Wall Street?

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Apr 23, 2014 at 1:03PM
Financials

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Equifax (NYSE:EFX) climbed 2% today after Credit Suisse upgraded the information services provider from neutral to outperform.

So what: Along with the upgrade, analyst Georgios Mihalos boosted his price target to $80 (from $65), representing about 17% worth of upside to yesterday's close. So while momentum traders might be turned off by Equifax's price sluggishness in recent months, Mihalos' call could reflect a growing sense on Wall Street that its prospects are becoming too cheap to pass up.

Now what: According to Credit Suisse, Equifax's risk/reward trade-off is particularly attractive at this point. "We upgraded EFX to Outperform and raised our target price to $80 from $65, reflecting our view that organic revenue growth will improve over 2H14 and materially accelerate in 2015," said Mihalos. "With a continued modest improvement in U.S. consumer lending and a forecasted 39% decline in mortgage origination volumes (MBA) in 2014 turning to 15% growth in 2015, we think EFX is likely to exceed Street consensus estimates for 2015 with revenue growth of 9%." When you couple that upbeat outlook with Equifax's still-reasonable forward P/E of 15, it's tough to disagree with Credit Suisse's bullishness.