BFH: Market Overreaction to Unlikely Credit Card Rate Cap Creates Buy Opportunity

Bread Financial Holdings, the Financial sector company, was revisited by a Wall Street analyst today. Analyst Nicholas Holowko from UBS maintained a Buy rating on the stock and has a $92.00 price target.

Nicholas Holowko has given his Buy rating due to a combination of factors tied to both regulatory risk and market reaction. He notes that the stock sold off sharply after political commentary around a 10% cap on credit card interest rates, a scenario that would clearly pressure BFH’s economics and industry-wide credit availability. However, he emphasizes that such a cap would likely require congressional action, and a similar proposal has already stalled, leading him to view the probability of implementation as low. Holowko also argues that the potential knock-on effects—reduced consumer spending, tighter access to credit, and higher reliance on more expensive lending channels—make an extreme cap less politically and economically viable.

Furthermore, his analysis highlights that credit card usage and balance-carrying behavior extend well into middle- and higher-income segments, suggesting that a strict rate ceiling could broadly dampen consumption, not just at the low end. He compares typical credit card APR ranges at major issuers with alternative borrowing options such as payday loans, showing that if card credit were severely constrained, many consumers would face significantly higher effective borrowing costs elsewhere. This reinforces his view that the proposed cap is not only unlikely but also counterproductive from a consumer welfare perspective. Against this backdrop, Holowko sees the recent share price weakness as disproportionate to the actual policy risk, supporting his Buy recommendation on BFH.

In another report released today, TipRanks – DeepSeek also upgraded the stock to a Buy with a $94.00 price target.