On Friday, CFRA, a well-regarded financial research firm, updated its outlook on Experian Plc (LON:EXPN:LN) (OTC: EXPGY (OTC:EXPGY)), a global information services company. The firm raised the share price target to GBP39.00 from the previous GBP34.00, while reiterating a Buy rating.
This adjustment reflects an anticipated price-to-earnings (P/E) ratio of 31.7 times for the fiscal year ending in March 2025, aligning closely with the average of Experian (OTC:EXPGF)'s industry peers.
The analyst from CFRA highlighted that Experian's earnings are expected to benefit significantly from the company's presence in Latin America, particularly due to structural growth opportunities stemming from regulatory reforms in Brazil. These reforms are enhancing access to credit for consumers and small to medium-sized enterprises (SMEs).
In North America, Experian's largest market, the company's diversified portfolio, especially its higher engagement with Tier 1 lenders, is believed to offer a degree of protection against macroeconomic uncertainties. This robust market positioning is anticipated to contribute to the company's financial resilience.
Additionally, Experian's ongoing transformation efforts in the EMEA (Europe, Middle East, and Africa) and Asia Pacific regions are set to further strengthen its performance. The company's strategy of divesting non-core activities is expected to create potential for margin improvements.
The CFRA analyst's earnings per share (EPS) estimates for Experian remain unchanged. Revenue growth is projected at 6% for the fiscal year 2024, with a slight expansion in EBIT (earnings before interest and taxes) margin by approximately 0.1 percentage points.
This financial progress is attributed to the operating leverage in Latin America and the anticipated positive outcomes from the company's transformation program, which are likely to balance out the costs associated with ongoing investments.
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