In a recent development, Equifax Inc. (EFX - Free Report) entered into a definitive agreement to acquire ID Watchdog. The acquisition, which is anticipated to close in third-quarter 2017, is aimed at boosting Equifax’s capabilities to serve its customers better.
Per the agreement, Equifax will pay approximately $63.34 million in cash, which translates to nearly 40 cents per share, to acquire all outstanding shares of ID Watchdog. The purchase price is approximately 77% premium to ID Watchdog’s shares closing price on Jun 15.
Founded in 2005, ID Watchdog is one of the leading providers of identity theft protection and resolution services to the Employee Benefits marketplace. Per the company, it “leverages proprietary technology that searches billions of data points to detect changes in the personal identity profiles of each subscriber and provides immediate resolution services.”
The acquisition is anticipated to further strengthen Equifax’s identity theft protection services and fortify its presence in the employee benefits space.
Equifax is the world’s largest data management company which organizes and assimilates data related to more than 820 million customers, and 91 million businesses globally.
Equifax has made strategic acquisitions to supplement its core business. In 2014, the company acquired TDX Group and Forseva, while it closed the Veda Group Limited buyout in first-quarter 2016.
Notably, the stock movement has been impressive when compared with the Zacks categorized Financial Transaction Services industry in the year-to-date period. Equifax gained 20.5% during the period compared with the industry’s return of 16.6%.
We believe that management’s efforts, such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America, should act as tailwinds. Also, the company’s strong correlation with the consumer and financial markets, as well as exposure in the U.S. and Europe are likely to propel growth, moving ahead.
However, we foresee the company’s investments in new initiatives to weigh on its upcoming quarterly earnings. Additionally, uncertainty surrounding IT spending and the strengthening U.S. dollar are a few concerns. Moreover, increasing competition from the likes of Fiserv (FISV - Free Report) and Total System Services (TSS - Free Report) are other factors likely to affect earnings in the near term.
Currently, Equifax carries a Zacks Rank #3 (Hold).
A better-ranked stock in the Financial Transaction Services space is Visa Inc. (V - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock has surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an average positive surprise of 7.2%. Visa has an expected long-term EPS growth rate of 16.9%.
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