TD Cowen Raises Bread Financial Price Target to $85 Amid Positive Outlook

Bread Financial (NYSE: BFH) has seen a significant increase in its price target, now set at $85.00, according to a recent research note from TD Cowen. This notable adjustment, up from the previous target of $68.00, reflects a cautiously optimistic view, as the firm maintains a “hold” rating on the stock.

On January 2, 2024, Keefe, Bruyette & Woods also revised its price objective for Bread Financial, raising it from $82.00 to $92.00 and assigning an “outperform” rating. Conversely, JPMorgan Chase & Co. reiterated its “underweight” rating, setting a price target of $72.00 in a note dated December 4, 2023.

The investment landscape for Bread Financial appears diverse, with Weiss Ratings reaffirming a “buy (b-)” rating on December 29, 2023. Additionally, UBS Group has initiated coverage with a “buy” rating and a target price of $92.00. Overall, five analysts have rated the stock as a buy, eight have assigned a hold rating, and three have given it a sell rating. According to MarketBeat, the average rating for Bread Financial stands at “hold,” with an average price target of $78.00.

Strong Earnings Performance and Shareholder Returns

Bread Financial recently reported robust earnings results for the quarter ending October 23, 2023. The company achieved earnings per share of $4.02, significantly outperforming analysts’ consensus estimate of $2.11 by $1.91. Revenue for the quarter reached $1.24 billion, well above the expected $974.30 million. Despite this positive performance, revenue was down 1.2% compared to the same quarter last year.

During the same period last year, the firm reported earnings of $1.83 per share. Analysts anticipate that Bread Financial will post an earnings per share of $6.45 for the current year.

In addition to its earnings report, Bread Financial announced a share buyback plan authorizing the company to repurchase $200.00 million worth of shares, equivalent to approximately 7.1% of its outstanding shares. Such buyback initiatives often indicate that company leadership believes the stock is undervalued.

The company also enhanced its shareholder returns by declaring a quarterly dividend of $0.23, which was paid on December 12, 2023. This marked an increase from the previous dividend of $0.21, resulting in an annualized dividend of $0.92 and a yield of 1.1%. The dividend payout ratio currently sits at 9.37%.

Institutional Investor Activity

Recent activity among institutional investors has also shaped the ownership landscape for Bread Financial. Curat Global LLC dramatically increased its holdings by 81,068.5% in the second quarter, acquiring an additional 449,930 shares for a total of 450,485 shares, valued at approximately $25.73 million.

Similarly, Bank of America Corp DE grew its position by 241.1%, now holding 537,656 shares worth about $30.71 million. Goldman Sachs Group Inc. also raised its stake by 104.8%, bringing their total to 736,604 shares, valued at approximately $36.89 million.

In the third quarter, Allianz Asset Management GmbH increased its holdings by 44.5%, now owning 943,659 shares worth around $52.63 million. Additionally, Norges Bank acquired a new stake valued at $16.60 million during the second quarter. Currently, institutional investors hold approximately 99.52% of Bread Financial’s stock.

About Bread Financial: Based in Columbus, Ohio, Bread Financial, previously known as Alliance Data Systems, specializes in private label credit programs, co-brand credit cards, and digital payment solutions for retail partners. The company’s technology platform enhances customer loyalty and increases sales through branded financing options. In addition to credit offerings, Bread Financial provides analytics and marketing services to help merchants understand consumer behavior and optimize promotional strategies.