Pacific Crest Downgrades Alliance Data Systems (ADS) to Sector Weight
Find out which companies are about to raise their dividend well before the news hits the Street with StreetInsider.com's Dividend Insider Elite. Sign-up for a FREE trial here.
Pacific Crest downgraded Alliance Data Systems (NYSE: ADS) from Overweight to Sector Weight and removed its price target. Analyst Josh Beck said he is slightly more cautious due to credit trends.
"We believe in the ADS data advantage; however, we are tilting our stock bias neutral given recent credit trends, particularly rising early-stage delinquencies. We are applying slightly more conservative credit metrics, which takes our 2017 EPS outlook down to $18.50. We are downgrading to Sector Weight and would look for a better entry point before increasing exposure," said Beck.
The analyst added, "Delinquency at ADS has increased by 50 basis points y/y year-to-date and 70 basis points y/y over the past three months, which prompts a slightly more cautious stance. To be clear, we are projecting a simple credit cycle normalization, not a severe correction, to which ADS is over-indexed because of outsized growth. ADS has grown credit receivables at a CAGR of ~20% since 2010 versus the overall market at ~2%. As expected, the privatelabel-market Equifax Risk score has decreased 1% per annum to 689 due to normal credit box expansion."
Shares of Alliance Data Systems closed at $216.99 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UPDATE: Cowen Downgrades Under Armour, Inc. (UA) to Market Perform
- Sprint (S) PT Raised to $4.50 at Jefferies
- Wedbush Raises price Target on NCR Corp. (NCR) Following 3Q; Reiterates Neutral
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Downgrades
Related EntitiesPacific Crest Securities
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!