On Thursday, RBC Capital adjusted its outlook on Bread Financial Holdings (NYSE:BFH) shares, increasing the company's price target to $45.00, up from the previous $38.00, while retaining a Sector Perform rating.
The revision follows Bread Financial's recent investor day, which spotlighted the company's successful efforts in refining its balance sheet and diversifying its business operations.
During the investor day, Bread Financial outlined its accomplishments in balance sheet optimization and provided a clear vision for its long-term strategy. The company's management also presented updated targets for return on tangible common equity (ROTCE), aiming for the mid-20% range, a goal that RBC Capital views as positive and within reach.
The financial services provider reported that credit loss rates are reaching a plateau, with peak losses already occurring and delinquency rates beginning to stabilize. These trends contribute to a more favorable risk profile for the company moving forward.
Additionally, Bread Financial's management discussed the advancements made in reducing late fees, a move that is anticipated to benefit the company if the proposed rule on late fee mitigation is implemented. This proactive approach to potential regulatory changes reflects the company's adaptability and forward-thinking management practices.
The revised price target by RBC Capital indicates a recognition of Bread Financial's solid financial position and the steps it has taken to maintain a strong and stable business model.
InvestingPro Insights
Following RBC Capital's updated outlook on Bread Financial Holdings (NYSE:BFH), InvestingPro data provides additional context to the company's financial health and market performance. With a market capitalization of approximately $2.03 billion and an attractive P/E ratio of 4.88, Bread Financial appears to be trading at a low earnings multiple, which can be enticing for value investors. Moreover, the company's commitment to shareholder returns is evident with a consistent dividend payout for 9 consecutive years, currently yielding 2.06%.
Despite a decline in revenue growth over the last twelve months, Bread Financial has maintained a robust operating income margin of 20.33%. This, along with a significant price uptick of 26.98% over the last six months, suggests investor confidence in the company's strategic initiatives and its ability to navigate market challenges. Additionally, analysts predict profitability for the current year, aligning with RBC Capital's positive outlook.
For those seeking deeper analysis and additional insights, InvestingPro offers further InvestingPro Tips on Bread Financial, including assessments of gross profit margins and future net income expectations. Subscribers can also access a comprehensive list of metrics and tips that might influence investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Currently, there are 9 additional InvestingPro Tips available, which could provide valuable information for investors considering Bread Financial as part of their portfolio.
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