Wolfe Research upgraded Bread Financial Holdings (NYSE: BFH) to Outperform from Peer Perform on Monday, citing accelerating earnings momentum and a favorable outlook for tangible book-value growth.
The firm set a $130 price target, representing roughly 24% upside from Bread Financial’s closing price of $105.19 on Friday. Wolfe’s valuation framework assumes a 1.6x multiple on the company’s 2027 estimated tangible book value per share, below the current 1.8x multiple.
Analysts at Wolfe project Bread Financial’s tangible book value will compound at a high-teens-plus annual rate, while normalized return on tangible common equity is expected to exceed 20%. The upgrade follows stronger-than-expected second-quarter results: diluted earnings per share reached $3.55, surpassing the $2.70 consensus, while revenue totaled $993 million against a $960.11 million forecast. The company attributed the beat to robust credit sales, loan growth and improved credit performance.
Wolfe also noted a recent deceleration in card-issuer balance growth, with year-over-year growth easing to 3.0% in July from 3.7% in June. The firm suggested the timing of Prime Day may have contributed to the slowdown, though broader industry data from BTIG showed improving credit metrics across major card issuers, including lower net charge-off and delinquency rates.
Bread Financial’s shares have gained 69% over the past 12 months, and the stock trades at a P/E ratio of 8.29. Seven analysts have raised earnings estimates for the company in the near term, according to InvestingPro data.
