In a report released today, Stephanie Moore from Jefferies downgraded Bright Horizons (BFAM – Research Report) to a Hold, with a price target of $135.00.
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Stephanie Moore’s rating is based on a combination of factors that suggest Bright Horizons is facing challenges that may limit its growth potential. The company is experiencing a plateau in enrollment, attributed to structural changes such as hybrid work models and the expansion of universal pre-kindergarten programs, which are reducing the demand for traditional childcare services. Additionally, there is a growing price fatigue among parents, which could hinder further pricing increases.
Furthermore, Moore anticipates that Bright Horizons’ operating margins will remain under pressure and below pre-COVID levels in the medium term. Despite improvements in occupancy rates, reaching pre-pandemic levels appears challenging. The company’s valuation has been adjusted to reflect these concerns, with a price target set at $135, down from $145, based on a 17x multiple of the 2026 EBITDA estimate. This valuation aligns with historical averages but is lower than the premium multiples seen in recent years, reflecting expectations of slower organic growth and sustained margin pressures.
Based on the recent corporate insider activity of 44 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of BFAM in relation to earlier this year.