MIDAS SHARE TIPS UPDATE: Experian set to score highly after blip

Midas tipped Experian in February 2021 as a company that would benefit from increasing reliance on data.

The company helps consumers across the globe to manage their credit scores so they can get credit cards and mortgages. The shares, tipped at £24.89, are now £28-plus.

The company says it has products for both good times and bad, with debt recovery services and fraud management solutions, as well as the credit risk products we know it for. It is also diversified geographically, operating in 30 countries.

Despite this diversity, Brian Cassin, Experian’s chief executive, presided over full-year figures for the year ending March 2023 that disappointed markets this week.

Turnover rose 9 per cent, but operating profit fell by 11 per cent. Growth for this year is now expected to be between 4 and 6 per cent, which is lower than analysts had hoped.

Less lending is bad for Experian, and banking problems in the US, which accounts for nearly 70 per cent of company revenue, have led to a lack of confidence in the sector and a slowdown in lending. That said, Experian has not been directly affected by any bank failures.

There are other bright spots too. Regions such as Latin America are seeing growth, with more people wanting credit reports and scrutinising their credit data. Analysts have tweaked their forecasts on weaker than expected data, but many are still seeing upsides.

Midas verdict: Experian is hard to value, but the shares have certainly struggled lately. While lending remains tight, the firm will find it hard to grow quickly, but it does have a diversified portfolio of products and is well-placed to benefit when the current conditions begin to loosen. 

The failure of banks in the US makes investors nervous, with a blip in the share price this week, but after their recovery they still look worth holding on to for the long term. 

Traded on: Main market Ticker: EXPN Contact: experianplc.com or 0115 828 6738