BFH Stock Forecast & Price Target

Bread Financial Holdings has demonstrated a resilient financial performance, as evidenced by a sequential net interest income increase of 6.0%, reaching $1.032 billion, despite a slight year-over-year decline. The company is poised for future growth, as it stands to benefit from an improving economic environment that is expected to drive revenue and receivables growth through the attraction of more retail partners and the expansion of its buy now, pay later (BNPL) initiatives. Additionally, stable to improving credit trends and controlled credit costs are seen as critical factors that may enable the company to enhance its valuation over time, further solidifying a positive outlook on its stock.

Bread Financial Holdings is currently facing significant financial challenges, evidenced by a 4.2% sequential decline in total revenues to $929 million and a 3.2% decrease in net interest income to $974 million. The company reported a decline in its common equity tier 1 (CET1) ratio from 13.8% to 13.0% year-over-year, alongside an increasing trend in forecasted losses for the third quarter, projected between 7.4% and 7.5%. Additionally, the negative noninterest income of $45 million further underscores the deteriorating financial condition, as it reflects a worsening trend in interchange revenues compared to both the prior quarter and year.