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Bread Financial Holdings (NYSE:BFH) stock gapped up 9% in Friday morning trading even after the credit card issuer disclosed that the Consumer Financial Protection Bureau’s proposed late fee regulation would hit revenue. Oppenheimer analyst Dominick Gabriele still sees value in the years ahead, upgrading the stock to Outperform from Perform.
In its Q4 earnings conference call Thursday, Bread (BFH) Chief Financial Officer Perry Beberman noted that the CFPB’s proposed credit card late fee rule, which is “significant to our business given our mix of private label accounts and deeper underwriting,” would reduce Q4 2024 revenue by about 25% vs. Q4 2023.
Oppenheimer’s Gabriele believes that Bread (BFH) could “recapture 75% of lost revenue with mitigation front-loaded,” he wrote in a note.
“Although late fee impacts are a big hurdle, this management team has proven to us they’re deliberate and focused for LT returns,” he added, while lauding the company’s “very enticing” valuation and capital metrics.
His Outperform rate diverges from the SA Quant system rating and the average Wall Street analyst rating, both at Hold.
