In June, the call was that Equifax (NYSE: EFX) was undervalued. Well, it's still undervalued, and I'm Reiterating my Buy rating, first recommended on June 3, 2009 at a price of $27.06. Surprisingly, Equifax's shares have meandered in the past four months, and technically, there is concern about a possible double-top at/near $30.
Still, based on the modest P/E of 14 and Equifax's status as one of three global providers of consumer and commercial credit information, commonly called credit reports, the calculation is that the recent pull-back to $25 was just profit-taking on EFX's spring surge to $30 from about $19.
Hence, $30 probably will not represent formidable resistance. More-cautious investors, however, should wait for EFX to close above $30 for three consecutive days. The First Call FY2009/FY2010 EPS estimates for EFX are $2.26 to $2.44.
Stock Analysis: Equifax is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in EFX now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your EFX position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $17.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
9-25-2009 @ 4:37PM
Schlittenburg07 said...
I don't agree. With the economic situation as it is and particularly with the problems in the Credit Industry worsening, I would classify all three credit reporting companies (Experian, Equifax and Trans Union) as high risk. More and more outraged consumers are dumping their credit cards every day with many paying-off balances or outright defaulting on the entire balance and swearing-off credit altogether. The Housing Market shows no recovery and more foreclosures looming and because of all this banks are flat-out just not lending. What all this translates to is that the future need for "credit reports" and "FICO scores" is bound to dwindle and so will go the business volume of these companies.
9-30-2009 @ 9:47AM
RubenSlape said...
Credit bureaus are the controlling link to gain "buy now, pay later" status that consumers have enjoyed since WWII.
People will continue to default and credit bureaus will help credit grantors to indentify these poor risks sooner and reduce bad debt expense.
GREAT FUTURE for credit bureaus that do the job best.