Uncertain Macro, Sluggish Hiring Trends To Impact Equifax's 2023 Results, Analyst Predicts - Downgrades Stock

B of A Securities analyst Heather Balsky downgraded Equifax Inc EFX to Underperform from Neutral at a lowered price target of $195 (from $255).

The analyst thinks the company could miss its 'seemingly ambitious' 2023 management sales guidance for the Equifax Workforce Solutions (EWS) business of growth of +16 in H2 and +26% in Q4 2023.

Balsky is concerned that the challenging and uncertain macro, lower-than-expected mortgage growth, and sluggish hiring trends could affect the company's 2023 results.

During its Q2 earnings call, the company reduced the 2023 outlook for revenues to $5.270 billion-$5.330 billion (from $5.275 billion-$5.375 billion) vs. consensus of $5.32 billion and adjusted EPS to $6.85-$7.10 (from $7.05-$7.35) vs. consensus of $7.17.

Management also lowered its 2023 EWS sales growth outlook by 200bps to +4%. 

Consequently, Balsky lowered the 2023 EPS estimate by 5.6% to $6.74, 3% below the company's revised guidance mid-point, and 2.9% below the consensus.

Also, the analyst reduced the 2024 EPS estimate by 8.3% to $8.32, 4.5% below the street estimate. 

Both year estimate revision reflects lower sales and margin outlook. 

The analyst expects any EPS miss to contribute to multiple contractions. 

Price Action: EFX shares are trading lower by 2.56% at $206.92 on the last check Monday.