J.P. Morgan analyst Reginald Smith downgraded Bread Financial (NYSE:BFH) to Neutral from Overweight as late fee regulation could reduce its high-margin revenue by 10%-20% and secular challenges in its private label portfolio limit share upside potential.
“We think shares will expand from current levels, but ultimately remain range-bound until investors get more clarity on late fee legislation and the consumer credit outlook,” Smith wrote in a note to clients.
The Neutral rating aligns with the SA Quant rating and the average Wall Street rating, both at Hold. Bread Financial (BFH) stock declined 0.7% in Monday afternoon trading.
The analyst also downgraded CompoSecure (NASDAQ:CMPO) to Neutral from Overweight as the provider of premium metal payment cards appears poised to capture more market share and recently launched a consumer crypto cold storage wallet that could contribute meaningfully to revenue growth over time.
“That said, we don’t see a path to sustained double-digit revenue growth (Management continues to talk to >15% secular growth in metal cards) and think CMPO remains in the penalty box until the near-term outlook and longer-term guidance are more closely aligned,” the analyst said.
The Neutral rating contrasts with the SA Quant rating of Sell and the average Wall Street rating of Strong Buy. Nevertheless, CompoSecure (CMPO) stock jumped 5.1%.