<b>Experian's cash generation a 'key strength', says Liberum</b>
28 January 2015 12:10
Broker Liberum reiterated its 'buy' rating on Experian stock after the information services firm announced an unexpected $600m (£394.7m) buyback, which amounts to 5% of its stock.
On Wednesday, the FTSE 100 group announced a share repurchase programme after conducting a full capital framework review, pledging to return surplus capital to shareholders from time to time
The evaluation concluded that given the group's strong cash generation acquisitions will still form part of the business growth mix, while dividend will remain in line with or ahead of earnings.
"This new return guidance will be further supported by the growth initiatives [...] where we would expect focus on growth initiatives in credit services as well as plans to stabilise and improve its US consumer division," Liberum said in a note.
The company also said it is adopting a new target leverage range of 2 to 2.5 times net debt to earnings before interest, tax, depreciation and amortisation (EBITDA), moving away from its previous target of 1.75 to 2 times net debt to EBITDA.
"Experian's sustainable superior cash generation remains a key strength," Liberum added.
Experian shares were up 3.00% to 1,200.00p at 12:06 on Wednesday.
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