Analyst Mihir Bhatia of Bank of America Securities reiterated a Hold rating on Bread Financial Holdings (BFH – Research Report), retaining the price target of $40.00.
Mihir Bhatia has given his Hold rating due to a combination of factors impacting Bread Financial Holdings’ future earnings and revenue projections. The company’s first quarter earnings per share (EPS) fell short of expectations, influenced by a higher-than-anticipated credit provision expense. Furthermore, the impending implementation of the late fee rule on May 14 has compelled the company to revise its full-year guidance downward. The anticipation is that these new regulations will pressure Bread Financial Holdings’ earnings in the short term, especially from the second to the fourth quarter, if the rule is enacted as scheduled.
Bhatia’s assessment also considers the broader challenges the company faces, including a projected decline in credit sales due to tighter credit controls and a general reduction in consumer spending. Although Bread Financial Holdings expects to see a decrease in net loss rates and non-interest expenses, the revised guidance reflects a challenging environment. Additionally, the company’s tax rate projection has been adjusted, and despite a positive reevaluation of the late fee rule’s impact, the overall outlook for revenue remains significantly affected, leading Bhatia to maintain a Neutral stance on the stock.
BFH’s price has also changed moderately for the past six months – from $27.820 to $36.650, which is a 31.74% increase.
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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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