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Morgan Stanley upgrades Experian on Brazil opportunity

By Michele Maatouk

Date: Wednesday 22 Jan 2020

Morgan Stanley upgrades Experian on Brazil opportunity

(Sharecast News) - Morgan Stanley upped its rating on shares of credit-checking firm Experian to 'overweight' from 'equalweight' on Wednesday as it pointed to a change in regulation in Brazil that should benefit the group.
The bank, which upped its target price on the shares to 2,950p from 2,360p, said the change in regulation from 'opt in' to 'opt out' in Brazil will accelerate the collection of positive credit. In turn, this should lead to higher consumer credit penetration and a richer credit data set for bureaus.

"We estimate higher credit penetration will add 2% organic growth for Experian in Brazi and a richer data set should drive development of Experian's Decisioning and Consumer business, adding a further 4% to its Brazilian organic growth," MS said.

The bank said the full benefits will take time to come though as bureaus build credit history, but the cyclical recovery in Brazil should drive strong organic growth in the near term, meaning Brazil can show higher growth for longer.

MS said it sees $1.2bn incremental revenue in Brazil from the changes.

At 1515 GMT, Experian shares were up 1.2% at 2,640p.

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