Long on Equifax (EFX): $150 PT

Price target: $150 Time frame: 12-18 months

The sentiment has turned. Buy equifax (NYSE: EFX) stock now.

The data breach was a minor f***-up, but sent shares tumbling from the 140s to the 90s. How about that.

The bull case for Equifax can be described from 3 angles:

  • strong market economics
  • strong business
  • strong management

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This may be obvious by now, but it’s clear that in this day and age, data is money. Equifax will continue to be an invaluable data provider to several customer segments:

  • Government
  • Businesses
  • Investors (Hedge funds, etc)

Specifically, ….

Government: there are several stakeholders: IRS, CIA, city planners, etc.

Businesses: any business that needs an edge. Say you are a major packaged food supplier that services convenience stores, grocery stores, etc. You need to know what types of people are buying your items, where they’re typically located, etc. It should be fairly easy to fathom how you would leverage consumer data to get an idea.

Hedge funds: say you want to short Dicks Sporting Goods. You know that Sports Authority is going out of business. So if those that used to shop at Sports Authority suddenly start shopping at Dicks Sporting Goods, that could be potentially harmful to your short. Given this scenario it should be fairly easy to fathom how a hedge fund’s quant team would leverage consumer data — find all people that used to shop at Sports Authority, track spending patterns, segment them automatically, predict future spending habits, observe if their new spending practices are concentrated in Dicks or more fragmented, etc.