Bread Financial has received an upgrade in its price target from $62.00 to $68.00 by Morgan Stanley, as indicated in a research report released to investors on January 29, 2024. Despite this upward revision, Morgan Stanley maintains an underweight rating on the stock, reflecting a cautious stance on the company’s future performance.
Recent Analyst Reports Reflect Mixed Ratings
This upgrade follows a series of evaluations from other analysts. On January 23, 2024, Wall Street Zen elevated its rating from “buy” to “strong-buy.” Earlier in January, Keefe, Bruyette & Woods increased their price target from $82.00 to $92.00, while also assigning an “outperform” rating to the company. In addition, Weiss Ratings reaffirmed a “buy (b-)” rating on December 29, 2023, and the Royal Bank of Canada set a price target of $83.00 on January 12, 2024. JPMorgan Chase & Co. maintained an “underweight” rating with a target price of $72.00 as of December 4, 2023.
Currently, four analysts have rated Bread Financial as a Buy, seven have assigned a Hold rating, and three have issued Sell ratings. According to data from MarketBeat.com, the company holds an average rating of “Hold” with a consensus target price of $79.27.
Strong Quarterly Earnings Report
Bread Financial recently announced robust quarterly earnings, reporting $2.07 earnings per share (EPS), significantly exceeding analysts’ expectations of $0.40 by $1.67. The company achieved a revenue of $975.00 million for the quarter, surpassing estimates of $954.74 million. The return on equity stood at 17.92%, with a net margin of 11.02%. In comparison, the company had posted an EPS of $0.41 during the same quarter last year.
Market analysts project that Bread Financial will report an EPS of 6.45 for the current fiscal year, underscoring the company’s anticipated growth.
Dividend Announcement and Stock Buyback Program
In a significant development, Bread Financial announced a quarterly dividend of $0.23 per share, scheduled for payment on March 16, 2024. Shareholders on record as of February 27, 2024, will be eligible for this dividend, which translates to an annualized dividend of $0.92 and a yield of 1.3%. The dividend payout ratio currently stands at 8.49%.
Moreover, the company’s board approved a stock repurchase program on October 23, 2023, allowing for the buyback of up to $200.00 million worth of shares. This initiative enables the company to reacquire approximately 7.1% of its shares through open market purchases, indicating the board’s belief that the stock is undervalued.
Institutional Investor Activity
Recent movements among institutional investors reflect growing confidence in Bread Financial. The Teacher Retirement System of Texas increased its stake in the company by 2.6% in the second quarter, now holding 7,460 shares valued at $426,000. Similarly, the Arizona State Retirement System boosted its holdings by 1.4% in the third quarter, owning 14,527 shares worth $810,000.
Other notable increases include the Commonwealth of Pennsylvania Public School Employees Retirement System, which raised its position by 1.7%, and the Illinois Municipal Retirement Fund, which lifted its stake by 0.9%. Overall, institutional investors currently hold 99.52% of Bread Financial’s stock, indicating strong institutional support.
About Bread Financial
Founded in Columbus, Ohio, Bread Financial, previously known as Alliance Data Systems, specializes in financial services that include offering private label credit programs, co-brand credit cards, and digital payment solutions for retail partners. The company’s innovative Bread technology platform delivers flexible payment options that seamlessly integrate into both e-commerce and in-store checkout experiences. In addition to core credit products, Bread Financial also provides analytics, marketing, and loyalty services to help merchants enhance consumer engagement and optimize promotional efforts.
As the company continues to evolve in a competitive market, its recent performance and strategic initiatives may position it favorably for future growth. Investors and analysts alike will be watching closely as more developments unfold.
