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Goldman Sachs ups targets for Experian, expects strong year
With Experian's latest set of full-year results showing organic growth accelerate to 8% in the fourth quarter, Goldman Sachs upped its target price on the credit reporting agency as it expects "growth momentum to continue".
Experian's organic growth came in well ahead of the broker's expectations and its benchmark full-year earnings before interest, tax, debt and amortisation was in line with the company-compiled consensus, leading to Goldman to lift estimates on the credit checker's 2019 organic growth estimates ahead to 7.3% from the previous 6.5% mark.
Experian had said it was expecting "another year of strong performance, with EBIT growth at or above revenue growth", signalling potential margin expansion in the year ahead.
In its North America Consumer Services wing, Experian reported a "small positive growth", which offset a double-digit decline in the UK and its UK and Ireland Decision Analytics and Marketing Services "performed strongly", leading the B2B segments growth of 9% and coming in ahead of the broker's overall expectations.
Experian also announced a further $400m buyback programme, equivalent to roughly 2% of its current market cap, while increasing its interim dividend by 10%.
Goldman Sachs said, "We see the 8% organic growth as a strong print and expect the growth momentum to continue into FY19, with positive operating leverage leading to moderate margin expansion."
Analyst believe that the strong growth and margin expansion are "not fully priced in" and reiterated their 'buy' rating, with a 12-month price target of 1,950p up from 1,920p.