On Monday, Citi analysts initiated a "positive catalyst watch" for Equifax (NYSE:EFX) stock, anticipating the upcoming first-quarter earnings report from the credit reporting agency, set for April 17th. The move comes as Citi analysts project a stronger performance for Equifax than the market consensus, particularly due to a recovery in the U.S. mortgage market.
According to the analysts, there is a general underestimation of the effect this rebound will have on Equifax's adjusted EBITDA. They expect the company's adjusted EBITDA to reach approximately $2.01 billion in 2024 and $2.48 billion in 2025, which is about 3% and 7% higher than the Visible Alpha consensus for those years, respectively.
Equifax's management previously provided guidance for the first quarter based on a 26% year-over-year decline in mortgage inquiries. However, more recent data indicates that mortgage applications decreased by only 13% in the first quarter of 2024.
Furthermore, Fannie Mae reported a 1% increase in new mortgages in USD for January and an 8% increase for February. These figures have led Citi to estimate Equifax's first-quarter EBITDA at $442 million, surpassing the consensus estimate of $413 million.
Despite these optimistic projections, Citi has not made changes to its forecasts or target price for Equifax at this time. The positive catalyst watch is expected to last for 30 days, aligning closely with the release of Equifax's first-quarter financial results.
InvestingPro Insights
As Equifax (EFX) approaches its first-quarter earnings report, real-time data and analysis from InvestingPro offer additional context for investors. With a market capitalization of $30.68 billion and a high P/E ratio of 55.2, reflecting its earnings multiple, Equifax is trading at a premium compared to the market. This is further highlighted by an adjusted P/E ratio for the last twelve months as of Q4 2023 standing at 53.59. The company's gross profit margin remains impressive at 55.65%, indicating strong profitability relative to revenue, which was $5.265 billion over the same period.
InvestingPro Tips also reveal that Equifax has maintained its dividend payments for an impressive 54 consecutive years, a testament to its financial stability and commitment to shareholder returns. Additionally, the company has managed to operate with a moderate level of debt, which is an important consideration for investors assessing the company's financial health. For those interested in further insights, there are additional 14 InvestingPro Tips available, which can be accessed with the exclusive coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
With Equifax's stock experiencing a large price uptick of 45.67% over the last six months and analysts predicting profitability for the year, the upcoming earnings report is eagerly anticipated. The real-time metrics and expert analysis from InvestingPro could be a valuable resource for investors looking to make informed decisions about their investments in Equifax.
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