Morgan Stanley has adjusted its target price for TransUnion (TRU, Financial), reducing it from $127 to $120, while maintaining an Overweight rating on the stock. Despite the revision, the firm remains optimistic about TransUnion's prospects, citing the company's robust performance in the first quarter and its consistent guidance as positive indicators.
The analyst from Morgan Stanley noted that the forecasts for the second quarter and fiscal year 2025 appear conservative. This suggests that if the current market conditions persist, TransUnion could surpass these expectations in the upcoming periods. The firm's confidence reflects its belief in the company's potential for stronger-than-expected performance despite the target price adjustment.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 16 analysts, the average target price for TransUnion (TRU, Financial) is $105.25 with a high estimate of $130.00 and a low estimate of $84.00. The average target implies an upside of 27.45% from the current price of $82.58. More detailed estimate data can be found on the TransUnion (TRU) Forecast page.
Based on the consensus recommendation from 19 brokerage firms, TransUnion's (TRU, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for TransUnion (TRU, Financial) in one year is $89.78, suggesting a upside of 8.72% from the current price of $82.58. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the TransUnion (TRU) Summary page.
TRU Key Business Developments
Release Date: February 13, 2025
- Revenue Growth: 9% increase on an organic constant currency basis in Q4 2024.
- Adjusted EBITDA Growth: 16% increase, with a margin of 36.5%, up 230 basis points.
- Adjusted Diluted EPS: $0.97, an increase of 21%.
- US Market Revenue Growth: 8% increase, with a 39.4% adjusted EBITDA margin.
- Financial Services Revenue Growth: 21% increase; 7% excluding mortgage.
- Mortgage Revenue Growth: 80% increase, accounting for 11% of total revenue.
- International Revenue Growth: 12% increase on a constant currency basis.
- Debt Prepayment: $45 million in Q4, totaling $150 million in 2024.
- Leverage Ratio: Achieved 3 times target at year-end.
- 2025 Revenue Guidance: 4.5% to 6% growth on an organic constant currency basis.
- 2025 Adjusted EBITDA Growth Guidance: 3% to 6% growth.
- 2025 Adjusted Diluted EPS Growth Guidance: 1% to 4% growth.
- Capital Expenditures: Expected to be about 8% of revenue in 2025.
- Dividend Increase: Quarterly cash dividend raised from $0.105 to $0.115.
- Share Repurchase Program: New $500 million authorization announced.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TransUnion (TRU, Financial) exceeded guidance on revenue and adjusted EBITDA for the fifth consecutive quarter, with a 9% revenue growth on an organic constant currency basis.
- The company achieved significant debt reduction, prepaying $45 million in debt during the quarter and $150 million in 2024, while also refinancing over $2.3 billion of term loans.
- TransUnion (TRU) launched several innovative products in 2024, including TruIQ Data Enrichment and TruValidate Fraud Mitigation, which are driving strong pipeline and new business wins.
- The company achieved its near-term leverage ratio target of 3 times by year-end, indicating strong financial management.
- TransUnion (TRU) announced a strategic collaboration with Credit Sesame to launch a new freemium credit management platform, enhancing its consumer offerings and market reach.
Negative Points
- Consumer Interactive revenue declined by 11% due to lapping a large breach win from the prior year, indicating challenges in maintaining consistent growth in this segment.
- The company anticipates a 1% to 4% adjusted diluted earnings per share growth in 2025, with a 600-basis-point headwind from foreign exchange and a higher tax rate due to global tax law changes.
- TransUnion (TRU) expects muted but stable lending activity in the US, reflecting volumes well below historical trends, which could limit growth potential.
- The company faces a 1% revenue headwind in 2025 from lapping against last year's large breach win, impacting overall growth projections.
- India's growth is expected to moderate in the first half of 2025 due to regulatory actions by the Reserve Bank of India, potentially affecting international revenue growth.
