Morgan Stanley Raises Bread Financial Price Target to $68

Bread Financial (NYSE: BFH) has received a boost in its stock price target, as Morgan Stanley raised it from $62.00 to $68.00 in a research report released on January 29, 2024. Despite this adjustment, Morgan Stanley maintains an underweight rating on the stock, indicating a cautious outlook for the company.

Other analysts have also provided insights into Bread Financial’s performance. On January 23, Wall Street Zen upgraded its rating from “buy” to “strong-buy.” Similarly, Keefe, Bruyette & Woods adjusted their price target from $82.00 to $92.00, assigning an “outperform” rating. In contrast, JPMorgan Chase & Co. reaffirmed its underweight rating with a target price set at $72.00 on December 4, 2023.

As of now, four analysts have rated Bread Financial as a buy, seven have issued a hold rating, and three have classified it as a sell. According to data from MarketBeat.com, the average rating for the stock is “hold,” with a consensus target price of $79.27.

Recent Financial Performance

Bread Financial recently reported its quarterly earnings, revealing a significant increase in profitability. The company announced earnings per share (EPS) of $2.07 for the quarter ending January 29, 2024, surpassing analyst expectations of $0.40 by $1.67. The total revenue for the quarter reached $975.00 million, exceeding estimates of $954.74 million. This performance resulted in a return on equity of 17.92% and a net margin of 11.02%. In the same quarter the previous year, Bread Financial reported an EPS of $0.41. Analysts currently anticipate that the company will achieve an EPS of 6.45 for the current fiscal year.

In addition to its earnings report, Bread Financial announced a quarterly dividend of $0.23 per share, which is set to be paid on March 16, 2024. The record date for this dividend is February 27, 2024, and the ex-dividend date is also February 27. This represents an annualized dividend of $0.92 and a dividend yield of 1.3%. The company’s dividend payout ratio currently stands at 8.49%.

Stock Buyback Program and Investment Trends

On October 23, 2023, Bread Financial’s board approved a stock repurchase program allowing the company to buy back $200.00 million worth of its shares. This program enables the company to reacquire up to 7.1% of its outstanding shares through open market purchases, which often indicates that the board believes the stock is undervalued.

Institutional investors have been actively adjusting their positions in Bread Financial. The Teacher Retirement System of Texas increased its stake by 2.6% during the second quarter, now holding 7,460 shares valued at approximately $426,000. The Arizona State Retirement System also raised its holdings by 1.4% in the third quarter, bringing its total to 14,527 shares worth about $810,000. Other notable investors include the Commonwealth of Pennsylvania Public School Employees Retirement System and the Illinois Municipal Retirement Fund, both of which have increased their investments in recent months.

Currently, institutional investors own approximately 99.52% of Bread Financial’s stock, reflecting strong confidence in the company’s future prospects.

About Bread Financial

Based in Columbus, Ohio, Bread Financial specializes in providing private label credit programs, co-branded credit cards, and digital payment solutions for retail partners. The company designs, issues, and services proprietary credit products, enabling merchants to offer branded financing options that enhance customer loyalty and increase sales at the point of sale. Through its innovative technology platform, Bread Financial integrates installment-based payment options into both e-commerce and in-store checkout experiences. In addition to credit offerings, the company provides analytics and marketing services to help merchants better understand consumer behavior and optimize promotional strategies.

As market dynamics continue to evolve, Bread Financial remains focused on leveraging its capabilities to drive growth and deliver value to its stakeholders.