Equifax Stock Drops After Revenue Guidance Misses Expectations

Credit ratings company Equifax (EFX) issued current-quarter guidance that came in below Wall Street’s expectation amid falling mortgage inquiries, sending its stock down more than 9% in extended-hours trading Wednesday evening.

The company, which assesses borrowers’ credit quality for lenders, said it expects current-quarter revenue of between $1.41 billion and $1.43 billion, with the top portion of that forecast missing analysts’ expectations of $1.44 billion.

Equifax reiterated its full-year revenue outlook of $5.72 billion and adjusted earnings of $7.35 per share, adding that its guidance “reflects an expectation of a decline of about 11% in our 2024 U.S. mortgage-credit inquiries.” However, that forecast is an improvement from the 16% decline the company projected in the previous quarter.

In recent months, the housing market has shown signs of cooling as higher-for-longer interest rates signaled by the Federal Reserve, coupled with high property prices, have pushed more buyers and sellers to the sidelines, though data released Wednesday from the Mortgage Brokers Association showed mortgage loan volume increased last week by 3.3%.

For the first quarter ending March 31, Equifax posted adjusted earnings of $1.50 per share on revenue of $1.389 billion. Wall Street had projected earnings per share (EPS) of $1.44, on revenue of $1.4 billion.

The credit-scoring giant said its non-mortgage business, which accounted for around 80% of total revenue in the first quarter, grew 9% from a year earlier from continued strong new ratings products using artificial intelligence (AI) and machine learning (ML).

The Equifax share price initially tracked higher after the 50-day crossed above the 200-day moving average in late December to form a bullish golden cross pattern, but has more recently undergone a retracement, with declines outpacing the broader financial sector.

Investors should keep a close eye on the $222 level, an area where the price may find support from a multi-month horizonal line and the 200-day moving average. A convincing close below this important technical level on Thursday could see lower support tested at $190 and $162.

Equifax shares fell 9.5% to $215.00 in after-hours trading Wednesday. Through Wednesday’s close, the stock had gained about 22% over the past 12 months.

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As of the date this article was written, the author does not own any of the above securities.