Credit Suisse doesn’t see the value in Experian after recent share price surge

Experian shares are up by almost a third so far this year, and Credit Suisse thinks most of the growth potential is now baked into the stock price

credit score
Credit Suisse expects organic growth to slow this year

Experian PLC (LON:EXPN) shares nudged higher on Tuesday, despite analysts at Credit Suisse stripping the credit score giant of its ‘outperform’ rating.

Credit Suisse is now ‘neutral’ on Experian, although it has lifted its price target up to 2,360p (from 2,250p) due to more favourable exchange rates.

READ: Morgan Stanley cuts Experian to 'equal weight'

The Swiss investment bank remains a fan of the FTSE 100 group, but with the stock up by almost a third so far in 2019, it thinks much of the firm’s potential is already priced in.

“Experian is, we believe, an excellent cash generative growth business with strong short and long term prospects,” said analysts in a note to clients.

“However, at 29.5x PE (price-earnings ratio) and 3.5% free cash flow yield (both CY19E), we think this is reflected in the price.”

Growth set to slow

The number crunchers expect organic growth to slow in the current year and are forecasting growth of 7% in the first quarter. That compares with 10% in the final quarter of Experian’s last financial year.

“We believe [this slowdown] creates a challenging environment for further re-rating.”

The longer-term outlook “remains positive” though, with strong underlying markets and a “raft of new market opportunities” supporting growth.

Despite the downgrade, Experian shares were up 0.5% to 2,433p in late-morning trading on Tuesday.

Quick facts: Experian

Price: 2813 GBX

Market: LSE
Market Cap: £25.55 billion

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