Wolfe Research raised its rating on Bread Financial Holdings to Outperform from Peerperform on Monday, citing sustained growth in credit sales and loan portfolios alongside improving credit performance.
The firm set a price target of $130 per share, implying roughly 24% upside from the stock’s prior close of $105.19. The target assumes a 2027 tangible book value multiple of 1.6x, down from the current 1.8x.
Bread Financial reported second-quarter diluted earnings per share of $3.55, well above the $2.70 consensus estimate, while revenue reached $993 million versus a forecast of $960.11 million. Analysts attributed the beat to robust credit sales growth, portfolio expansion and better-than-expected credit metrics.
Over the past year, Bread Financial’s shares have returned 69%, supported by a normalized return on average tangible common equity expected to exceed 20%. Wolfe Research also projects tangible book value growth at a high-teens compound annual rate.
Credit card issuer balance growth slowed in July, rising 3.0% year-over-year compared with 3.7% in June. Wolfe Research suggested the deceleration may reflect timing around Prime Day.
Separate data from BTIG showed broad improvements in credit card performance last month, with net charge-off rates and delinquency rates declining across most issuers. InvestingPro data also indicated seven analysts have revised earnings estimates higher for the upcoming period.
Bread Financial trades at a price-to-earnings ratio of 8.29.
