- BofA Securities analyst Mihir Bhatia downgrades Alliance Data Systems (NYSE:ADS) to Neutral on the absence of few near-term catalysts and the expectation of continuing pressure on loan growth and flattish full-year revenue.
- The downgrade follows a 66% runup in ADS shares YTD, and has "fully recovered from COVID-related concerns about its longer-term viability," Bhatia writes in a note to clients. See how ADS shares' total return compares with other pure-play credit card companies in chart below.
- Still, ADS management has been performing solidly on multiple fronts, including its new Buy Now, Pay Later offering, announcing the spinoff of its LoyaltyOne business, enhancing its leadership, and setting long-term targets, he said.
- Maintains $130 price target.
- ADS stock slips 0.6% in premarket trading.
- Bhatia's rating aligns with the Neutral Quant rating and breaks from the average Wall Street rating of Bullish (7 Very Bullish, 4 Bullish, 7 Neutral, 1 Bearish).