Jefferies upgrades Experian as volumes stabilise, growth accelerates

Jefferies has upgraded its rating on Experian from 'hold' to 'buy' and hiked its target price by nearly 40%, saying that growth is at an inflection point for the data analytics and credit ratings agency.

"We present new analysis on Brazilian credit and global web traffic/app usage that gives us confidence on inflecting growth in Experian's Latam division and B2C activities. We believe both dynamics are underappreciated by consensus," Jefferies said in a research report on Wednesday.

Meanwhile, credit volume projections in the US are pointing to a stabilisation through most of 2024, with "early signs of a recovery" in the second half of 2025.

The broker said some $2.8bn to $4bn could be spent on M&A over the next 12 months – "either data assets and/or bolt-on capabilities in areas of strategic focus".

Regarding the stock's valuation, Jefferies said Experian's shares are trading at the bottom of its recent range, and is currently trading at a 15% discount to similar peers on a price-to-earnings basis.

"We believe that as the market focus moves past volume uncertainties, the narrative will shift toward recognising the strong structural growth and product innovation embedded in Experian," the broker said.

The stock was up 0.8% at 3,374p by 0931 GMT.