Compass Point starts Bread Financial with a Buy on favorable risk reward

As previously reported, Compass Point initiated coverage of Bread Financial with a Buy rating and $54 price target. Despite the material re-rating of the shares year-to-date, the firm continues to see a favorable risk reward over the next year and “a path for continued share price outperformance” with execution on credit containment and improvement as well as a successful navigation of the card late fee rule, the analyst tells investors. Near-term headwinds will persist given the uncertain outlook on the economy and interest rates, but the firm expects Bread’s recent credit trend inflection will persist despite the recent slowdown in consumer activity, the analyst added.