BMO Capital analyst James Fotheringham has assigned their neutral stance on BFH stock, giving a Hold rating on January 26.
Geoff Meacham has given his Hold rating due to a combination of factors surrounding Bread Financial Holdings. Despite a positive 4Q23 performance with higher-than-expected net interest income (NII) and lower credit costs, concerns about the company’s future performance weighed on the rating. The forecast for slower loan growth and higher losses in 2024, along with a less optimistic outlook on revenue, contributed to the decision to adjust the earnings estimates downward. In particular, the anticipated low-single-digit decline in average loans and revenues, contrasted with the consensus, indicates a more cautious view of the company’s growth prospects.
Furthermore, while the guidance on the potential impact of the Consumer Financial Protection Bureau’s (CFPB) late fee rule was better than initially feared, it still represents a significant hit to future revenues. Meacham’s concerns also include uncertainties regarding credit quality and the implications of the CFPB’s late fee proposals. These factors led to a reduction in the target price for Bread Financial Holdings to $32, reflecting a valuation at 0.5 times the 2025 estimated tangible common equity (TCE). Despite the company’s transformation and improvements in financial stability and disclosures, these looming challenges have necessitated a more conservative outlook, thus the Hold rating.
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Based on the recent corporate insider activity of 53 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of BFH in relation to earlier this year.
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Bread Financial Holdings (BFH) Company Description:
Alliance Data Systems Corp. engages in the provision of data-driven and transaction-based marketing and customer loyalty solutions. It operates through the following segments: LoyaltyOne, Epsilon and Card Services. The LoyaltyOne segment provides coalition and short-term loyalty programs. The Epsilon segment offers end-to-end, integrated marketing solutions. The Card Services offers risk management solutions, account origination, funding, transaction processing, customer care, collections, and marketing services for the company’s private label and co-brand credit card programs. The company was founded in 1996 and is headquartered in Columbus, Ohio.
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