Positive Credit Trends and Effective Loss Management Drive Buy Rating for Bread Financial Holdings

Analyst Mihir Bhatia of Bank of America Securities maintained a Buy rating on Bread Financial Holdings (BFH – Research Report), retaining the price target of $61.00.

Mihir Bhatia has given his Buy rating due to a combination of factors including Bread Financial Holdings’ better-than-expected credit trends and the company’s ability to manage credit losses effectively. The recent data shows that credit losses are not only trending better than consensus estimates but are also improving compared to the previous year. This positive trend is expected to become more apparent in the third quarter as the effects of last year’s hurricane-related relief measures subside.
Bhatia also notes that while loan growth remains under pressure, the improvement in credit trends is a more significant factor for the company’s outlook. The net charge-off rate for May was notably lower year-over-year, and delinquency rates have remained stable, suggesting a potential decline in future loss rates. These factors, combined with a stable receivables balance, underpin Bhatia’s decision to maintain a Buy rating with a price objective of $61, based on a valuation of 7 times the estimated earnings per share for 2026.

Bhatia covers the Financial sector, focusing on stocks such as Synchrony Financial, Capital One Financial, and American Express. According to TipRanks, Bhatia has an average return of 9.6% and a 63.94% success rate on recommended stocks.