Morgan Stanley on Wednesday upgraded TransUnion ( NYSE: TRU ) to Overweight from Equal-weight as it believes the stock presents attractive value, despite a worsening consumer environment.
The research firm expects higher credit losses, consumer loan delinquencies, and net charge-offs with credit losses likely deteriorating to above-normal levels in 2023.
"This type of environment typically coincides with lower credit inquiries, leading to lower growth for bureaus," analyst Toni Kaplan said in a note to clients.
"We believe we de-risked our model appropriately and still see significant value at TRU: we lower TRU EBITDA/EPS estimates for 2023 by 4% to account for the potential weakening consumer environment," she added.
Morgan Stanley views TransUnion's ( TRU ) innovation, expansion in attractive markets, and leveraging of its global operating model positively.
"We view TRU as an innovative credit bureau, having been able to grow faster than Equifax ( EFX ) in comparable segments. Valuation looks highly attractive at a ~4.5-turn discount to info services and EFX," said Kaplan.
Price target on TransUnion ( TRU ) was lowered to $78 from $80 (32.2% potential upside to last close).
Morgan Stanley's bullish stance is in line with sell-side ratings , but SA Quant is of the view that the stock is at high risk of performing badly .
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TransUnion upgraded at Morgan Stanley as stock presents 'attractive value'