Equifax
stock is sliding after the credit-reporting firm missed third-quarter estimates, and lowered guidance amid a weak mortgage market.
On Wednesday, Equifax (ticker: EFX) reported third-quarter adjusted earnings of $1.76 a share, short of the $1.78 Wall Street had expected, according to FactSet. Revenue of $1.32 billion also fell short of expectations for $1.33 billion.
The company lowered 2023 guidance midpoints to adjusted earnings per share of $6.67 and revenue of $5.256 billion, down 31 cents and $44 million, respectively. Analysts had expected 2023 adjusted earnings per share of $6.90 and revenue of $5.298 billion, according to FactSet.
“The reduction in both revenue and adjusted earnings per share are principally due to the weaker U.S. mortgage market and the impact of foreign exchange partially offset by the benefit from our Boa Vista acquisition,” said Equifax CEO Mark W. Begor in a press release, adding that Boa Vista is the second-largest credit bureau in Brazil.
“We expect the weaker U.S. mortgage market at current high interest rates to continue in the fourth quarter, and we now expect full year Equifax mortgage credit inquiries to decline about 34%, which is down over 3 percentage points from our prior framework,” Begor added.
Equifax stock is tumbling 6.8% to $163.20 in premarket trading.
William Blair analysts led by Andrew Nicholas, who rate Equifax stock at Outperform, wrote that they will be looking for insights in multiple areas on the earnings call Thursday morning on topics including specifics on the drivers behind guidance adjustments and the company’s expectations for the mortgage market as the year draws to a close.
“Despite current headwinds to its mortgage business, continued strength in Equifax’s nonmortgage revenues and the competitive positioning of the Workforce Solutions business are enough to keep us bullish at the company’s current valuation, especially considering the significant earnings power unlock that should come from the (eventual) normalization in mortgage activity levels,” analysts wrote.
Write to Emily Dattilo at [email protected]
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