Equifax shares dip after BofA cuts rating to underperform

Investing.com -- Equifax Inc (NYSE:EFX) shares were weighed by a downgrade from BofA Securities, which cited an uncertain pace of mortgage recovery.

Equifax shares are down 2.6% on Monday but up 6.3% so far this year. They are trading around $206.80.

BofA cut its rating to Underperform from Neutral, and lowered its price target to $195 from $255. The analysts see the potential for downside despite the credit reporting firm cutting its 2023 guide by 3% at the midpoint.

They said Equifax’s 2025 financial target “relies on a pace of mortgage recovery that’s still uncertain.”

While Equifax has maintained its 2025 $7 billion in sales and $12.75 earnings per share goals, “the mortgage market also needs to recover two-thirds of its lost volume (compared to normalized 2015-19 levels). We think the next few quarters will be important to determine if EFX needs to cut,” the analysts said.

BofA also cited increased competition, particularly in Equifax’s Talent Solutions business, which provides employment and income verification services. “Competitors including Experian (OTC:EXPGF) and Truework are growing their own (albeit much smaller) databases and ramping products,” the analysts said. “Truework just partnered with TransUnion (NYSE:TRU).”