Despite reporting a massive 27 percent drop in profits following its widely publicized data breach, Equifax Inc. (NYSE: EFX) stock managed to avoid a large sell-off in after-hours trading on Thursday, falling less than 1 percent and indicating that investors still see value in the credit monitoring company.
Equifax released its first quarterly earnings report since its massive data breach after the market closed Thursday, reporting diluted earnings of 79 cents per share on revenue of $834.8 million. Analysts had been expecting EPS of $1.49 on $847.3 million in revenue.
[Read: Should You Use a Credit Monitoring Service?]
The company reported $27.3 million in pre-tax expenses associated with the breach, which exposed sensitive data of more than 145 million Americans.
Interim CEO Paulino Barros did his best to reassure shareholders of the company’s commitment to security.
“As we look to the future, I have committed Equifax to four things: protecting consumers, enhancing our security, empowering consumers to control access to personal credit data, and leading our industry to confront the massive economic and national security threats represented by cybercriminals,” Barros said in a statement.
Barros took over in September after former CEO Richard Smith resigned.
Equifax investors have been feeling the pain from the security breach fallout for months now. The stock plummeted more than 30 percent following news of the breach, but has started to regain some of its losses, posting a 14 percent gain since Sept. 15.
It’s difficult to predict is whether Equifax’s lost business will eventually return. Morgan Stanley analyst Toni Kaplan says Equifax stock could see a 50 percent dip if it doesn’t.
[Read: How to Tell a Company Is in Trouble.]
“We believe that the bear case … is that consumers question why they should be paying EFX for credit monitoring services following a loss of trust as well as the fact that they did not detect their own data breach for some time after it occurred,” Kaplan wrote in September, immediately after the breach.
However, on a valuation basis, Equifax stock may also have some upside if long-term fallout from the breach isn’t as bad as feared. The stock’s price-earnings ratio is a relatively modest 23, and the company said its adjusted third quarter EPS was $1.53 after removing hacking-related expenses.
Morgan Stanley has an “equal-weight” rating and $127 price target for EFX stock.
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Equifax Inc (EFX) Stock May Be OK, After All originally appeared on usnews.com
