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.
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.