After Security Breach, Is The Long-Term Thesis Still Intact For Equifax?

Shares of Equifax Inc. EFX lost more than 14 percent Friday morning as investors are likely deeply concerned with the company's announcement that it suffered a major data breach affecting 143 million people.

Analysts at JPMorgan felt it prudent to revisit their long-term thesis on Equifax amid the data breach and didn't feel the need to make any changes to their rating. The firm's Andrew Steinermanmaintains an Overweight rating on Equifax's stock, noting that the data breach didn't include its core consumer and commercial credit reporting databases (see Steinerman's track record here).

Equifax's CEO Rick Smith confirmed with the analyst that the financial impact of the breach is limited to just the B2C business which accounts for just 7 percent of total revenue. This doesn't mean that investors shouldn't be concerned with the impact but the public has unfortunately developed a "general numbing" to data breaches.

Nevertheless, Equifax is at its core a data company so the plunge in the stock is deserved, Steinerman suggested. But at the end of the day, the company's longer-term business outlook "remains steadfast" and investors may want to be buyers of the stock when the daily decline exceeds 10 percent.

Finally, there are reports of several executives selling their stock within days of the company discovering the breach. However, management confirmed that the only a select group of "ring-fenced employees" were aware of the incident and it was not communicated to the executive management team until after the insider stock sales occurred.

Related Links:

The Market In 5 Minutes

A Peek Into The Markets: U.S. Stock Futures Signal Lower Start On Wall Street