Wolfe Research Assumes Bread Financial Holdings (BFH) at Peerperform

Wolfe Research analyst Darrin Peller assumes coverage on Bread Financial Holdings (NYSE: BFH) with a Peerperform rating.

The analyst comments "We assume coverage of BFH at Peer Perform (previously outperform). With shares within ~10% of our prior PT, we believe that near-term upside is limited given a lack of positive revision catalysts and view risk/reward as fairly balanced. We believe credit improvement in ’26 and beyond is largely reflected in consensus and BFH’s valuation. Similar to recent prints, we would not expect credit-driven beats alone to drive strong share performance. After months of continued improvement on the credit side, the investor debate appears squared centered around the trajectory of BFH’s PPNR growth as well as its ability to deliver returns more consistently inline with its long-term targets. Road Towards Hitting LT Earnings Algorithm is a Long One. While we continue to believe BFH’s long-term operating targets are achievable, the glidepath is long and will require several consecutive years of successful execution, not to mention stable to improving macro. Reaching those targets will depend primarily on turning to LSD / MSD loan growth again, driving its credit costs towards the ~6% range (neither our estimates nor consensus contemplate this in ‘27E), reserve rates approaching Day 1 levels, generating further positive operating leverage, and consistent capital return. Until it becomes clear that BFH can deliver these targets, we find it difficult to underwrite significant multiple expansion from here. Near Term Loan Growth Downside. We view balance growth that has yet to inflect as a key risk to estimates in ’26 and ‘27E. Although BFH’s tight underwriting stance was a key driver of its credit improvement, the monthly data suggests to us that the unwinding of BFH’s conservative stance may be more gradual than we previously anticipated. To the extent the anticipated inflection fails to materialize, we see further downside risk to estimates next year and beyond. We Downgrade BFH from Outperform to Peer Perform. We believe BFH deserves to trade at a modest discount to SYF (8.5x ’27 EPS) given its longer runway towards meeting its LT operating targets. Our FV range moves to $63-86 predicated on 5.5x-7.5x our CY27 EPS of $11.49."

For an analyst ratings summary and ratings history on Bread Financial Holdings click here. For more ratings news on Bread Financial Holdings click here.

Shares of Bread Financial Holdings closed at $72.21 yesterday.

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