Broker snap: Experian expensive and risky, says Canaccord

9th May 2013 11:14

Credit checking giant Experian delivered full-year results in line with expectations as sales grew across all its global markets. In the year to end-March, the company saw revenues from continuing activities rise 6.0% to $4.7bn, with earnings before interest and tax (EBIT) up 7.0% to $1.25bn. However, analysts at Canaccord Genuity said the company's stock is "expensive and increasingly risky", recommending a 'sell' rating and target price of 898p.The broker also said group organic revenue growth has slowed, reflecting its performance in Latin America where revenue has fell by nine percentage points to 14% in the year. Brazil accounts for 90% of the result."The Brazilian business is 60% consumer facing and transaction based," Canaccord said."Here, recent data points have not reassured. Inflation is elevated. Consumer non-performing loan rates are rising. Consumer confidence is weak, reaching a three-year low in April and retail sales growth data was down year-on-year." Trading updates from the Brazilian consumer facing units of InBev, Diageo, Rexam and British American Tobacco disappointed.The analyst said given the soft economic background it sees risk to double-digit growth organic revenue growth estimates for Latin American falling."We expect that Brazilian economic news flow, particularly consumer credit growth, unemployment rates, job vacancies, hours worked and consumer credit default rates will act as a driver for shares," the broker added.RD