On Friday, Bright Horizons (NYSE:BFAM) saw its price target increased by BMO Capital from $102.00 to $104.00, while the firm kept a Market Perform rating on the stock. The adjustment comes after Bright Horizons reported an earnings per share (EPS) that exceeded expectations, driven by both revenue growth and improved margins.
The company experienced a sequential increase in Full Service Center (FSC) utilization, which aligns with typical seasonal patterns. This uptick in utilization contributed to the expansion of segment margins. Additionally, management indicated that losses in the UK were becoming less pronounced.
Bright Horizons' Back-Up Care Advantage (BUCA) segment, although experiencing a slowdown in growth, still managed to surpass performance expectations. However, the segment's margins were impacted due to an earnout from a previous acquisition and a reallocation of overhead expenses.
Despite these developments, management has chosen to uphold its guidance for the year 2024. Furthermore, the initial guidance for the second quarter of 2024 has been provided, which includes the consensus estimates. In response to these factors, BMO Capital has revised its own estimates upwards, alongside the price target adjustment for Bright Horizons.
InvestingPro Insights
Bright Horizons (NYSE:BFAM) has been subject to a price target adjustment following an earnings report that surpassed expectations. For investors considering this stock, real-time data and insights from InvestingPro could provide a clearer picture of its financial health and market position. With a market capitalization of $6.05 billion and a high price-to-earnings (P/E) ratio of 81.97, the company is trading at a significant earnings multiple. This is further highlighted by the adjusted P/E ratio for the last twelve months as of Q1 2024, which stands at 80.55.
InvestingPro Tips suggest that while net income is expected to grow this year, investors should be aware that six analysts have revised their earnings estimates downwards for the upcoming period. Additionally, despite the fact that analysts predict the company will be profitable this year, the company is trading at high valuation multiples across EBIT, EBITDA, and Price / Book, with respective multiples of 4.92, 34.53% growth in EBITDA, and a 21.54% gross profit margin.
For those looking to delve deeper into Bright Horizons, InvestingPro offers more tips that could guide investment decisions. To explore these further, individuals can visit https://www.investing.com/pro/BFAM and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With the InvestingPro platform, users have access to a total of 10 additional tips that can help in evaluating the company’s performance and potential.
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