On Thursday, BofA Securities adjusted its stance on TransUnion (NYSE:TRU), elevating the stock from Neutral to Buy and setting a price target of $92.00. The revision follows a 11% decrease in the company's shares since mid-May.
BofA Securities cites several reasons for the upgrade, including TransUnion's attractive valuation, consistent performance in consumer lending, and potential growth in its Emerging Verticals (EV) business.
The new price objective represents a 29% potential increase from the current levels, based on a price-to-earnings (P/E) ratio of 20 times the projected 2025 earnings, which is considered the recent valuation peak for the company. The analyst believes that the stock is currently undervalued and sees this as an opportune moment for investors.
TransUnion's commitment to achieving or surpassing expectations, especially after a turbulent 2023, is also a factor contributing to the positive outlook. The analyst expects the company to report earnings per share (EPS) that exceed the conservative guidance for its EV and Mortgage segments.
For the year 2024, BofA Securities anticipates an EPS of $3.93 for TransUnion, which is higher than the company's own forecast range of $3.69 to $3.85. This expectation is rooted in the assumption that TransUnion will continue to perform robustly and may deliver better-than-anticipated financial results.
In other recent news, TransUnion, a global information and insights company, has surpassed the $1 billion revenue milestone for the first time in the company's history during the first quarter of 2024.
The performance was largely driven by the mortgage sector, which is expected to grow by 50% for the year, significantly outpacing the previous estimate of 25%. In light of these strong quarterly results, the company has raised its full-year 2024 guidance, although it maintains a cautious stance due to market uncertainties.
Simultaneously, TransUnion has declared a quarterly cash dividend for the first quarter of 2024, set at $0.105 per share, reflecting the company's commitment to delivering value to its shareholders. This development is part of the company's regular dividend payments to its shareholders.
Furthermore, the company's transformation initiatives, particularly in technology and operating models, are progressing well. TransUnion also reported robust double-digit growth in its international segment, especially in India, where the company aims to expand its business significantly. These are the latest developments in the company's continuous efforts to navigate the complexities of modern commerce and extend its market presence.
InvestingPro Insights
TransUnion (NYSE:TRU) has been spotlighted by BofA Securities with an upgraded outlook and a new price target. Complementing this analysis, InvestingPro data and tips provide additional insights. With a market capitalization of $13.85 billion and a notable gross profit margin of 60.56% in the last twelve months as of Q1 2024, the company demonstrates a strong ability to generate earnings relative to revenue. Despite a negative P/E ratio of -71.52, analysts expect improvements, forecasting a more favorable P/E ratio of 57.3 for the same period.
Moreover, TransUnion's revenue growth of 4.91% in the last twelve months further underlines its consistent performance, aligning with BofA Securities' optimism regarding the company's consumer lending and Emerging Verticals (EV) business. An InvestingPro Tip highlights that TransUnion has raised its dividend for three consecutive years, reflecting a commitment to shareholder returns even amidst market fluctuations. Additionally, analysts predict the company will be profitable this year, which could signal a turnaround after a challenging 2023.
For investors seeking deeper analysis and additional tips, InvestingPro offers more insights, including the fact that the company's liquid assets exceed short-term obligations, indicating financial stability. To access a comprehensive set of InvestingPro Tips for TransUnion, visit https://www.investing.com/pro/TRU. There are 5 more tips available on InvestingPro, and by using the coupon code PRONEWS24, readers can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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