EQUIFAX DATA BREACH

Equifax plunges as breach seen costing hundreds of millions

Analysts are worried that Equifax’s data breach could cost the company hundreds of millions of dollars and hurt the company’s reputation for years to come.

Equifax, which supplies credit information and other information services, revealed on Thursday it suffered a data breach that could have potentially affected 143 million consumers. The company said 209,000 credit card numbers were obtained, in addition to “certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers.”

Shares Equifax plummeted by 15 percent on Friday in the wake of the announcement.

Stifel compared the incident to previous cybersecurity breaches at prominent retailers.

The “significant data breach is likely to cost the company materially, and costs could drag on for a number of years,” analyst Shlomo Rosenbaum wrote in a note to clients Friday. “We aren’t changing estimates right now because of lack of clarity, though clearly ours and consensus estimates are too high in the near term.”

In similar fashion, SunTrust also focused on the negative impact to the company’s credibility with consumers.

“This is clearly a material event, in our opinion. The breach compromises Equifax’s reputation as a trusted steward of consumer data, and will create a near-term business disruption, per the company’s public comments,” analyst Andrew Jeffrey wrote in a note to clients Thursday.

Equifax shares have outperformed the market this year before the news. Its stock rallied 21 percent year to date through Thursday versus the S&P 500’s 10 percent return.

To assess the potential costs for Equifax, Stifel’s Rosenbaum cited the large credit card breaches at Target (TGT) in 2013 and Home Depot (HD) in 2014, when hackers got access information on tens of millions of customers.

“Based on large scale breaches at Target and Home Depot, we believe $300M-$325M in gross costs for the breach would not be unreasonable,” he wrote.

Cowen analyst George Mihalos added “based on prior cyber security incidents, we would be unsurprised to see a total cost exceeding $200 million” in a report Thursday.

To be sure, while Wall Street agreed the data breach was a significant negative development for Equifax they aren’t giving up totally on the company yet.

Both SunTrust and Cowen reiterated their buy and outperform ratings respectively. In addition, Stifel also maintained its buy rating, but removed Equifax from the firm’s recommended “select list.”

The firms also defended the company over the controversy surrounding insider selling after the breach. Three Equifax executives sold shares worth nearly $2 million in the company days after a data intrusion was discovered, according to filings to the SEC.

“Management selling a few days after the discovery looks bad, though extent of breach likely not known at that time,” Stifel’s Rosenbaum wrote.

Equifax acknowledged later in a statement that the three executives sold a “small percentage” of their shares, but that they “had no knowledge that an intrusion had occurred at the time they sold their shares.”

The company did not immediately respond to a request for comment on the Wall Street research coverage.

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Article source and video: CNBC.com via YouTube

THE SPOTLIGHT:

Ok I’m not going to trip on Equifax being all evil or “careless” about your credit stuff because I’m not there, I didn’t see it happen, nor am I in the middle of the situation. However, as an investor, shareholder, retailer, credit card issuer, and a consumer, what do you think will happen to Equifax’s reputation?

First let’s be clear on one thing; they say that this breach is affecting your personal information.

Look, there’s nothing “personal” about your information because everything in your report is related to business transactions like finances. It’s not going to tell you my ethnicity, my religion or what church I attend, my marriage or my sexual preference. It’s not going to tell you what foods I like and hate, what annoys me about my family, nor is it going to tell you what time I wake up in the morning or how I go to bed at night. THAT my friend – is personal information.

So this breach is all business. That means they’re keeping tabs on your strawman. Yes, your strawman. If you’re clueless of what that is, it’s basically a corporate version of you on paper that keeps track of your financial interactions. So Equifax didn’t risk YOUR information, it risked your strawman’s information.

Next, because there’s a financial situation going on here, the next step is regarding some legal repercussions – lawsuits perhaps? One positive thing I like to see out of this is if what ever breached the system all of a sudden increase your credit score by 100 points. Then you might not be pissed after all! If that’s the case, well,  Marry Christmas, don’t ever say a hacker never gave you anything.

As a credit card issuer I’d explore alternatives of separating ties from Equifax. That might be too much, but I could see credit card issuers really looking into their relationship with the credit agency because of this.

This breach could also really get under the skin of those who really take their “credit report and score” seriously. I was in a point in my life where I could careless what Equifax did with whatever info they had. I didn’t even know about them until I went to job corp. So if there is a lawsuit in the horizon, Equifax could breath a little easier to know that just half of the affected could make some noise and raise sand.

On the serious side, this company is public. That means their stock is going go take a beating. This could prompt massive shorting of their stocks. Whether the execs “did know about it during selling” or not, I just find the timing very coincidental. So either I buy up massive shares of Equifax and hold on to it KNOWING that the stock will suffer for awhile, or I just short the hell out of it, they have shareholders controlling a company that controls your strawman “personal” information. For more information on your strawman, click here.

The mainstream corporate controlled mass media won’t tell you this because it’s not their job to tell you, so don’t trip on them – just like you won’t trip on McDonalds for not selling organic.

It’s nothing personal, it’s just business.

 

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