Equifax Shares Rise on $640M Acquisition of Fraud Prevention Company Kount

Shares of Equifax were up 2.6% on Jan. 8 after the credit-reporting company announced an agreement to acquire Idaho-based Kount, which provides artificial intelligence-driven fraud prevention and digital identity solutions. The company expects to close the $640 million acquisition in the first quarter of 2021.

Equifax (EFX) expects the Kount acquisition to expand its global footprint in the digital identity and fraud prevention solutions markets. It believes that the Kount Identity Trust Global Network, which is a risk-based authentication platform, will help businesses enhance customer engagement while preventing fraud.

The Kount Identity Trust Global Network uses artificial intelligence to link trust and fraud data signals from 32 billion digital interactions, 17 billion devices and 5 billion annual transactions across 200 countries. (See EFX stock analysis on TipRanks)

Kount’s CEO Bradley Wiskirchen stated, “We are excited to be able to offer Kount solutions with an expansive set of Equifax data, analytics and products. Equifax’s global reach will accelerate Kount’s international adoption, allowing us to help more businesses around the world to better protect their digital innovations and their customers against emerging threats while improving the customer experience.”

In reaction to the announcement of the Kount acquisition, Stephens analyst Brett Huff noted that he likes the deal as he feels that Kount’s data is “large enough to increase decision accuracy conferring a positive network effect.” He also believes that the acquisition could provide new use cases and/or better outcomes for existing use cases. To this end, Huff reiterated a Hold rating on Equifax with a $176 price target.

Last month, the company raised its 4Q guidance and stated that it expects a revenue growth rate of 16% in 2020. It cited favorable trends in Equifax Workforce Solutions and its mortgage business. Equifax said that it expects revenue to gain 6% in 2021, which is ahead of analysts’ estimate of 2%.

Shares have risen about 25% over the past year and the average price target of $210.70 indicates a further upside potential of 13.2% in the 12 months ahead.

Currently, the Street is cautiously optimistic about the stock, with a Moderate Buy analyst consensus that breaks down into 8 Buys and 5 Holds.

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