Experian (EXPN) share price forecast: What’s next in 2022?
The Experian share value has been on a downtrend since the year started as expectations about tighter global macroeconomic conditions this year have depressed the valuation of the credit solutions company.
For Experian, interest rate increases and tighter credit conditions could affect the company’s financial performance.
The pandemic provided a strong tailwind to its business as the decision from multiple major central banks to reduce their benchmark rates to zero, or even to negative territory, prompted a surge in the demand for loans and mortgages.
In this article, we will be assessing the price action, fundamentals and most recent Experian share news to model potential scenarios for the stock for 2022 and beyond.
Experian stock technical analysis and price drivers
The latest downtrend in the price of Experian stock has led to a break below the 200-day simple moving average and has pushed momentum oscillators to their lowest levels in many months.
This emphasises the negative momentum the stock has been experiencing in contrast to the FTSE 100’s 1.70% year-to-date rise (as of 1 February).
However, in the past few days, EXPN has bounced off the 3,000p level following the release of a trading update covering the third quarter of the 2022 fiscal year.
Even though shares initially dropped after the results were published, market participants appear to have changed their minds about the company’s short to mid-term outlook as reflected by this latest uptick.
As long as the price remains below the 200-day SMA, the technical outlook continues to be bearish. Momentum indicators favour this view as the relative strength index (RSI) remains heavily depressed at 38 while the moving average convergence divergence (MACD) is neck-deep into negative territory.
Apart from these technical readings, some factors could influence the Experian share price forecast and the EXPN further direction:
Credit conditions: Central banks have started to review their pandemic-era policies amid higher inflation readings and a seemingly overheated global economy. If credit conditions become tighter, the demand for loans and other credit instruments may decline and that could affect the performance of Experian business in 2022 and forward.
Market sentiment: Expectations about tighter macro conditions have prompted a risk-off move in the markets. Risk premiums for equities have increased and that has caused a contraction in the trading multiples of stocks. If this situation continues, the price of Experian stock could stay under pressure. Especially if the measures taken by central banks to restrict money supply are harsher than expected.
Experian fundamental analysis: Latest earnings
On 14 January, Experian published a trading update covering the third quarter of the 2022 fiscal year.
Revenues during these three months surged 15% on a constant-currency basis compared to the same period a year ago, with Latin America and North America leading the uptick as sales in those regions advanced 21% and 16%, respectively.
North America’s revenues accounted for 67% of the group’s revenues, while Latin America’s sales accounted for 12%.
According to the latest investor presentation released a few weeks ago, Experian remains the largest credit solutions company by revenue in North America, ahead of Equifax and TransUnion. It generated over $3.5bn in revenues from this market alone during the 2021 fiscal year.
By the end of last year, the company reported net profits of $802m, or $87.6 a share, on a fully diluted basis, resulting in an 18% jump compared to 2020. For that same period, operating cash flows grew from $1.26bn to $1.49bn.
By the end of the 2021 fiscal year, Experian reported long-term borrowings of $3.7bn on total assets of $10bn, including $5.3bn in goodwill, $2bn in intangible assets and $180m in cash and equivalents.
EXPN share price prediction: Analyst sentiment
Are Experian shares a buy, sell or hold? The consensus recommendation for Experian stock, according to data compiled by MarketBeat, was a ‘hold’, based on the opinions of seven analysts (as of 1 February) – three analysts gave the stock a ‘buy’ rating and the other four rated it ‘hold’.
The average EXPN stock price target was 3,216.67 pence a share – 5% higher than the last closing price of 3,081p (as of 31 January). The highest estimate stood at 4,000p and the lowest at 1,900p.
JP Morgan & Chase had the highest Experian stock price forecast, although it trimmed this elevated target by £100 on 17 January. Both the American Investment bank and Barclays had an ‘overweight’ rating on EXPN stock.
In regards to Experian’s latest trading update, Steve Clayton, a fund manager for Hargreaves Lansdown, stated:
Experian (EXPN) share price forecast: Targets for 2022, 2025 and 2027
From a technical perspective, the outlook for Experian stock in the short-term remains bearish as the price continues to trade below its 200-day SMA, while momentum readings are heavily depressed. The situation could change if market sentiment starts to shift in the following weeks and the price bounces off the £3,000 threshold and above the 200-day SMA.
Wallet Investor had a bearish outlook on the performance of Experian stock in the short-term (as of 1 February). For 31 December 2022 the algorithm-based service predicted that the stock could recover to an average price of 3,482.430p, rise to 3,879.210p by the end of 2023 and hit 4,675.980p by the end of 2025. It didn’t provide price targets for 2030, but suggested EXPN stock could reach 5,054.170p by the end of January 2027.
These forecasts have been drafted by analysing Experian historical stock price. They should not be considered a recommendation to buy or sell the stock. Many variables could weigh on the short-term and long-term performance of EXPN. Actual results could deviate significantly from any predictions.
Do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest money that you cannot afford to lose.
FAQs
Is Experian share a good buy?
Experian is a well-established business with a dominant position in its respective industry. The company has a solid balance sheet and its revenues, earnings, and cash flows have been growing in the past few years. Still, whether EXPN is a suitable investment depends on your own investment objectives and research. Remember, it’s important to reach your own conclusion about the company’s prospects and likelihood of achieving analysts’ targets.
Why has the Experian stock price been going down?
The price of Experian has been declining amid a shift in the market’s sentiment toward the stock due to changing macro conditions including expectations of interest rate increases in the US.
Will Experian stock go up or down?
According to Wallet Investor, even though the price of Experian could decline in the short term, the mid-term and long-term outlook was bullish based on an assessment of the company’s historical price trend (as of 1 February).
