Equifax Buys Datavision (CSCO) (DELL) (EFX) (IBM) (MSFT)

Equifax Inc. (EFX) is one of the leaders in facilitating and securing commerce through proprietary databases containing information on approximately 400 million consumers and businesses worldwide.

The company recently announced the acquisition of DataVision Resources, a leading provider of data and business solutions to the mortgage, insurance and financial services industries.

The company did not disclose the financial terms of the transaction. DataVision's operations will now become a part of Equifax's St. Louis-based TALX business unit.

The acquisition of DataVision adds more value to the distinct capabilities and relationships across Equifax’s areas of expertise. Moreover, Datvision’s verification services use a common platform that can be customized for seamless integration into the company's business processes.

Datavision’s mortgage services primarily deal with back-office processing, closing and post-closing functions. In addition, the company boasts key strategic partnerships with Microsoft (MSFT), Cisco (CSCO), Dell Inc. (DELL) and International Business Machines (IBM).

Equifax has increasingly pursued accretive acquisitions to expand its core business. The company intends to gain further traction in its four targeted geographical regions — India, Russia, China and Latin America.

Equifax is expanding its core operations in Russia and also building resources in India.

This has resulted in a 12.0% growth in the International segment during the second quarter. We expect these strategic acquisitions to generate growth for the company over the long term.

Equifax is also streamlining its non-core operations. The company recently sold all the assets of its Direct Marketing Services division to Alliance Data Systems for $117.0 million. The company used the proceeds to expand its business and meet other general corporate obligations. With the sale of its direct marketing division, the company would now be able to focus better on its main business.

Equifax delivered modest second quarter results, matching the Zacks Consensus EPS Estimate. Though the guidance for the third quarter was positive, it was not good enough to drive share prices. However, management’s focus on product innovation, broadening data assets through acquisitions and continuous share gains in North America were encouraging. We believe Equifax is well positioned to benefit from its leadership position in important markets and strength in international markets.

However, given the company’s strong correlation with consumer and financial markets, as well as its U.S. exposure, we expect only gradual improvement in results, consistent with the economic recovery in the U.S. Current weakness in the mortgage sector could also rationalize Equifax’ growth.

Currently, Equifax has a Zacks #3 Rank, implying a short-term Hold rating.

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