Transunion Outlines New Risk Factors amid Pending Acquisitions


TransUnion (TRU) is an information and insights company. It offers consumer credit reporting and analytical services to businesses. TransUnion recently announced agreements to acquire Neustar and Sontiq for $3.1 billion and $638 million, respectively. It expects to close the transactions in Q4. The company has also decided to divest its healthcare business for $1.7 billion and intends to use the money toward debt repayments. (See Analysts’ Top Stocks on TipRanks)

With this in mind, we used TipRanks to take a look at the newly added risk factors for TransUnion.

Q3 Financial Results

TransUnion reported revenue of $791.6 million for Q3 2021 against $695.9 million in the same quarter last year, and exceeded the consensus estimate of $776.7 million. It posted adjusted EPS of $1.01 compared to $0.81 in the same quarter last year, and beat the consensus estimate of $0.93.

For Q4, the company anticipates revenue in the band of $764 million to $774 million. It expects adjusted EPS in the range of $0.88 to $0.91.

The company ended Q3 with $709 million in cash and has $300 million available under a revolving credit facility.

Risk Factors

The new TipRanks Risk Factors tool shows a total of 31 risk factors for TransUnion. The company recently updated its risk profile with four new risk factors under the Finance and Corporate category.

TransUnion has informed investors that it intends to borrow to finance a portion of Neustar and Sontiq acquisitions. It cautions that the additional borrowings would increase its debt service obligations and could lead to its credit rating being downgraded.

The company has told investors that it may be unable to complete the Neustar and Sontiq acquisitions. It mentions that certain conditions need to be met before the transactions can close, including obtaining regulatory approvals.

The company has informed investors that even if it succeeded to complete Neustar and Sontiq acquisitions, it may not achieve the anticipated benefits. It mentions that difficulties integrating the businesses and unforeseen costs could reduce the expected benefits of the acquisitions.

Regarding the sale of its healthcare business, TransUnion has told investors that it intends to close the transaction in Q4. However, the closing is subject to a number of factors that could prevent the divestiture from happening, require significant adjustments, or delay the transaction.

Most of TransUnion’s risk factors come under the Finance and Corporate category, with 38% of the total risks. That is below the sector average of 44%.

Analysts’ Take

Morgan Stanley analyst Toni Kaplan recently reiterated a Buy rating on TransUnion stock but lowered the price target of $124 from $131. Kaplan’s reduced price target still suggests 9.1% upside potential.

Overall, consensus among analysts is a Strong Buy based on six Buys and two Holds. The average TransUnion price target of $135.29 implies 19% upside potential to current levels.

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