RBC Capital Markets downgrades Experian on valuation

RBC Capital Markets downgraded its stance on shares of credit-checking firm Experian to ‘sector perform’ from ‘outperform’ on Thursday, saying the valuation is largely up with events, although it continues to like the equity story.

The bank noted that the stock has performed well operationally and share price-wise. It has outperformed the FTSE 100 by 35% year-to-date and 43% on a 12-month view, reflecting the market move into large cap quality defensives, along with good operational delivery, although RBC said it has been surprised at the scale of the re-rating.

"Whilst Covid-19 will impact the business, Experian appears to be taking share and the investment in Consumer is paying off.

"However, we see the valuation as now more prohibitive for new money and we move to sector perform, although our target price nudges up to 2,700p." The target price was previously 2,500p.

Despite being positive on the overall equity story over the longer term, RBC said it can’t justify enough upside to put new money into the stock and would wait for a better entry point.

At 1040 BST, the shares were down 1.6% at 2,664p.