On Friday, RBC Capital Markets adjusted its outlook on TransUnion (NYSE:TRU), a major player in credit reporting, by enhancing the price target on the company's shares to $106.00, up from the previous target of $85.00. The firm has maintained its Outperform rating on the stock.
The revision in the price target comes on the heels of TransUnion's demonstrated capability to achieve robust revenue growth even amidst a downturn in consumer lending. This resilience, coupled with a consistent track record of surpassing expectations and providing upward revisions, is anticipated to propel future estimates and restore investor trust in the company.
RBC Capital Markets notes that TransUnion's current valuation is attractive when compared to its industry counterparts and past figures. This favorable valuation is expected to contribute to a potential re-rating of the stock's value in the market.
The price target of $106 set by RBC Capital Markets is based on a forward-looking price-to-earnings ratio of 22 times the forecasted earnings for the fiscal year 2025. The Outperform rating underscores the firm's positive stance on the future performance of TransUnion's shares.
In the words of the analyst from RBC Capital Markets, "TRU's ability to deliver solid revenue growth despite the weakness in consumer lending, along with consistent solid beats and raises, should drive estimates higher and help regain investor confidence. TRU's inexpensive valuation compared to peers and historical bodes well for the stock to re-rate higher. We raise our target price to $106 (22x FY25 P/E) and reiterate Outperform."
Investors and market watchers will be keeping a close eye on TransUnion's stock performance following this updated assessment by RBC Capital Markets.
In other recent news, TransUnion reported an 8% revenue growth in the second quarter of 2024, surpassing expectations. This growth was driven by significant contributions from its financial services and emerging vertical segments, along with double-digit growth in international markets. The company has raised its full-year guidance and is advancing its technology with the OneTru platform, expected to drive further revenue.
Despite overall growth, certain segments like collections, tenant, and employment businesses have seen a decline. Adjusted EBITDA margin for Q3 is also expected to decline. However, strong growth in insurance, public sector, tech retail, e-commerce, and media verticals, along with positive results from TruValidate fraud prevention suite and FactorTrust alternative lending product, are promising signs.
TransUnion's full-year 2024 revenue is forecasted to grow 7% to 8%, with an anticipated margin expansion and steady growth in the financial services sector. The company also plans to reduce its leverage ratio and continue its transformation program.
These are some of the recent developments that have been observed in the company's performance and strategies.
InvestingPro Insights
Following the updated assessment by RBC Capital Markets on TransUnion (NYSE:TRU), insights from InvestingPro offer additional context to investors considering the stock. TransUnion has a notable gross profit margin of approximately 60.79% over the last twelve months as of Q2 2024, reflecting its strength in maintaining profitability relative to sales. Additionally, the company has demonstrated a solid price performance with a significant return of 13.73% over the last month, indicating positive investor sentiment and momentum.
One of the InvestingPro Tips highlights that TransUnion has raised its dividend for three consecutive years, which could be appealing to income-focused investors. Moreover, analysts predict the company will be profitable this year, providing a potential upside for those looking at the company's earnings trajectory.
InvestingPro also provides a suite of detailed analytics and tips for investors seeking a deeper dive into TransUnion's financial health and market position. There are additional tips available on InvestingPro, which can be accessed at: https://www.investing.com/pro/TRU. For those interested in leveraging these insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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