Bread Financial and Synchrony Financial see Morgan Stanley downgrades on rising credit risk

Mar. 28, 2022 12:27 PM ETBread Financial Holdings, Inc. (BFH), SYFBy: Khyathi Dalal, SA News Editor4 Comments

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  • Morgan Stanley downgraded Synchrony Financial (SYF -4.7%) and Bread Financial (ADS -6.5%) to Equal Weight from Overweight; Price targets for both have been reduced to $40 (from $56) and $67(from $104) respectively.
  • U.S. Banks and Consumer Finance team at the firm said "War changes everything," the team argued that higher for longer inflation increases credit risk, an inverted curve could slow growth and that they shift their bear case to recession, all of which led them to downgraded their industry view to In-Line from Attractive and cut a number of ratings and price targets across the group.
  • In mid-March, Wolfe Research analyst Bill Carcache downgraded Synchrony and Bread Financial to Peer Perform from Outperform as it is incrementally cautious on the low-end consumer.
  • Bread Financial saw delinquency rate of 4.4% in February while Synchrony Financial delinquency rate stood at 2.9%.

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