Monitor This Important Chart Level for Equifax Shares

Credit ratings company Equifax (EFX) recently issued current-quarter guidance that fell below Wall Street’s expectations, causing its stock to drop more than 9% in extended-hours trading. The company cited a decline in mortgage inquiries as a key factor impacting its revenue forecast. Investors are now closely watching key chart levels to determine the potential future direction of Equifax shares.

Key Takeaways

• Equifax shares fell more than 9% in extended trading on Wednesday after the credit scoring company issued current-quarter revenue guidance below analysts’ expectations amid falling mortgage inquiries.
• The company said its outlook reflects an expectation of an 11% decline in 2024 U.S. mortgage-credit inquiries.
• Equifax’s non-mortgage business, which accounted for around 80% of total revenue in the first quarter, grew 9% from a year earlier, driven by new ratings products using artificial intelligence and machine learning.
• A convincing close below key support at $222 could see Equifax shares test lower levels at $190 and $162.

Equifax’s current-quarter revenue guidance of between $1.41 billion and $1.43 billion missed analysts’ expectations of $1.44 billion. The company also reiterated its full-year revenue outlook of $5.72 billion and adjusted earnings of $7.35 per share. However, Equifax expects an 11% decline in its 2024 U.S. mortgage-credit inquiries, an improvement from the 16% decline projected in the previous quarter.

The housing market has shown signs of cooling in recent months due to higher interest rates and high property prices, which have led to fewer buyers and sellers participating. Despite this, data released by the Mortgage Brokers Association showed a 3.3% increase in mortgage loan volume last week.

Equifax’s non-mortgage business, which saw a 9% growth from the previous year, was driven by new ratings products utilizing artificial intelligence and machine learning technologies. The company’s stock initially rose after a bullish golden cross pattern formed in late December but has since retraced, underperforming the broader financial sector.

Chart Analysis

Investors are advised to closely monitor the $222 level for Equifax shares. This level may act as support, as it aligns with a multi-month horizontal line and the 200-day moving average. A convincing close below $222 could signal further downside potential, with support levels at $190 and $162 coming into play.

Equifax shares dropped 9.5% to $215.00 in after-hours trading following the revenue guidance announcement. Despite this decline, the stock had gained approximately 22% over the past 12 months.

As investors assess the future prospects of Equifax, keeping an eye on key chart levels will be crucial in determining potential price movements. The company’s performance in the non-mortgage business, driven by innovative AI and ML products, will also play a significant role in shaping its financial outlook.

It is important for investors to conduct thorough research and consider all factors before making any investment decisions related to Equifax or any other securities. Market conditions can change rapidly, and staying informed is essential for successful investing.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

Read the original article on Investopedia.