Deutsche Bank lowers Experian to 'sell' on 'less supportive' market

Analysts at Deutsche Bank downgraded shares of consumer credit reporting company Experian to 'sell' on Monday, citing a "less supportive" market.

Analysts at the broker said they felt it would be "very difficult" for Experian to replicate the growth it had seen over the last twelve months and dropped their estimate for organic growth over the year ending March 2020 from 8% to 5%.

"Once growth starts slowing for the cycle, it is likely to keep on slowing until we enter a recession, and, as such, we believe the stock should start to see a de-rating now," said Deutsche.

The German investment bank also said rising rates of delinquencies in the US and a likely deterioration in the outlook for employment also weighed on its outlook.

"We continue to see Experian as a high-quality company with high barriers to entry, but we regard the stock as overvalued for the changing growth outlook.

"We make some minor changes to our earnings forecasts, and our target price remains 1800p; however, due to the deteriorating US growth outlook, we reduce our recommendation to Sell from Hold, with 10% downside."

In terms of the upside risks to its negative stance, Deutsche highlighted more-supportive end-market growth than it was forecast, better pricing, greater benefits from the firm's own product development and potential benefits stemming from mergers and acquisitions.