Needham downgrades TransUnion to Hold, prefers Equifax among credit bureaus

As previously reported, Needham downgraded TransUnion (TRU) to Hold from Buy after revisiting the firm’s thesis on both that Equifax (EFX) following the strong performance in both stocks, which the firm views as at least partially due to investors anticipating upward revisions if the market is indeed heading into a favorable interest rate environment. While both stocks stand to benefit if lower rates lead to increased lending volumes, especially in U.S. mortgage, the firm believe that Equifax’s business mix is more leveraged to lower rates given the larger mortgage exposure and also believes that other factors – including a better quality of earnings, more disciplined capital allocation and M&A strategy, and a stronger balance sheet – make Equifax likely to be able to maintain its premium valuation. The firm, which keeps a Buy rating on Equifax, is raising its price target on shares to $350, stating that it remains the analyst’s Top Pick and occupies the analyst’s slot on the Needham Conviction List.