Citi stays cautious about Experian on falling US credit flows

Citi has lifted its target price for data analytics and consumer credit reporting group Experian after a near-30% jump in the stock in the past two months, but has maintained a 'neutral' rating on the stock.

Citi said back in August that while US non-mortgage credit flows had moderated, the full impact of increases in credit card rates may not have been seen. Historical analysis suggests that credit flows may not have yet bottomed out, driving its cautious stance on Experian's outlook.

Since the start of November – which Citi pointed out was when the 10-year US Treasury yield peaked around the 5% mark – Experian's share price has surged by 29%. The outperformance means the stock's price-to-earnings ratio has risen from around 22x to 26x, near its peak see in the spring of 2022.

"Our new analysis of historical interest rate hike cycles suggests that it is likely that credit flows will trough after the Fed Funds rates starts to fall," Citi said.

"With this in mind, we reduce our organic growth forecast for FY25E from 6.3% to 5.6%—below company-compiled consensus at 6.9%."

The target price has been lifted from 2,893p to 3,122p, suggesting little upside from Wednesday's 3,094p level, down 0.9% on the day.