Equifax Impacted by Credit Market

Equifax (EFX - Analyst Report) is finding new avenues for growth in the International, Personal and Commercial Solution businesses. The company's growing reliance on subscription revenue provides a steady revenue stream, and the TALX acquisition is accretive to earnings.

However, continued weakness in mortgage activity resulted in a 7.8% decline in mortgage-related revenues in 2007, thereby softening its U.S. Consumer Information Solution business. Given its sensitivity to the credit market, we continue to maintain a Hold recommendation on EFX shares with a six-month target price of $38.00.

Equifax, a member of Standard & Poor's (S&P) 500 Index, is one of the leaders in facilitating and securing commerce with proprietary databases containing information on approximately 400 million consumers and businesses worldwide. Equifax operates in 14 countries in North America, Europe, and Latin America through three segments: Equifax North America, Equifax Europe and Equifax Latin America.

Though the acquisition of TALX Corporation has been expanding margins, this has come with increased execution risk. Moreover, the company is exposed to risks from the slowing credit market.

Over the last six years, EFX has traded in a range of 14x to 20x forward earnings. Given the challenging market for equities, we continue to expect that the stock will trade at the low-end of this range. Our new target price of $38.00 represents a multiple of 15.0x our 2008 EPS estimate, a discount to the industry mean.

Read the full analyst report on EFX.