Zacks Investment Research Downgrades Alliance Data Systems (ADS) to Hold

Zacks Investment Research lowered shares of Alliance Data Systems (NYSE:ADS) from a buy rating to a hold rating in a research note published on Wednesday.

According to Zacks, “Alliance Data remains well-positioned for growth from significant opportunities owing to the current trend in consumer-based businesses, shifting their marketing spends to data-driven marketing strategies. It has made several strategic acquisitions to grow inorganically. Solid receivables growth in Card Services along with strength in LoyaltyOne and Epsilon segments should continue to drive top-line growth. For 2017, core EPS is expected at $18.10 on $7.8 billion revenues and for 2018, core EPS is projected at $21.50 on revenues of $8.7 billion. However, increasing expenses and dependence on limited clients for revenues, raise concerns. Shares of Alliance Data have underperformed the industry in a year. It is set to release fourth quarter results on Jan 25. A Zacks Rank #3 increases the predictive power of a beat, but combined with the Earnings ESP of -0.94%, makes prediction difficult.”

ADS has been the subject of several other reports. Royal Bank of Canada reiterated a buy rating and issued a $293.00 price objective on shares of Alliance Data Systems in a report on Thursday, January 4th. Keefe, Bruyette & Woods reiterated a buy rating and issued a $300.00 price objective on shares of Alliance Data Systems in a report on Friday, October 6th. Barclays upgraded Alliance Data Systems from an equal weight rating to an overweight rating and lifted their price objective for the stock from $265.00 to $310.00 in a report on Wednesday, January 3rd. BMO Capital Markets reiterated a hold rating and issued a $235.00 price objective on shares of Alliance Data Systems in a report on Wednesday, November 22nd. Finally, Stephens set a $304.00 price objective on Alliance Data Systems and gave the stock a buy rating in a report on Tuesday, January 2nd. Four research analysts have rated the stock with a sell rating, nine have given a hold rating and ten have assigned a buy rating to the company. The stock presently has an average rating of Hold and a consensus target price of $266.76.

Alliance Data Systems (NYSE:ADS) traded up $2.75 during midday trading on Wednesday, reaching $276.37. The company had a trading volume of 429,874 shares, compared to its average volume of 473,177. Alliance Data Systems has a 52 week low of $209.00 and a 52 week high of $278.33. The company has a market cap of $15,117.14, a P/E ratio of 29.31, a price-to-earnings-growth ratio of 0.98 and a beta of 1.79. The company has a debt-to-equity ratio of 9.53, a current ratio of 2.11 and a quick ratio of 2.09.

Alliance Data Systems (NYSE:ADS) last released its quarterly earnings data on Thursday, October 19th. The business services provider reported $5.35 EPS for the quarter, topping the consensus estimate of $4.80 by $0.55. Alliance Data Systems had a return on equity of 62.95% and a net margin of 7.09%. The company had revenue of $1.91 billion during the quarter, compared to the consensus estimate of $1.97 billion. During the same period last year, the company earned $4.74 EPS. Alliance Data Systems’s revenue for the quarter was up 1.4% on a year-over-year basis. equities research analysts anticipate that Alliance Data Systems will post 17.08 EPS for the current year.

The company also recently declared a quarterly dividend, which was paid on Tuesday, December 19th. Shareholders of record on Tuesday, November 14th were paid a dividend of $0.52 per share. The ex-dividend date of this dividend was Monday, November 13th. This represents a $2.08 dividend on an annualized basis and a dividend yield of 0.75%. Alliance Data Systems’s dividend payout ratio is currently 22.06%.

In other Alliance Data Systems news, CFO Charles L. Horn sold 2,128 shares of the business’s stock in a transaction dated Thursday, November 30th. The stock was sold at an average price of $235.00, for a total transaction of $500,080.00. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. Insiders own 2.60% of the company’s stock.

Large investors have recently made changes to their positions in the stock. Fiduciary Trust Co. bought a new position in shares of Alliance Data Systems during the 2nd quarter valued at approximately $108,000. ETF Managers Group LLC bought a new position in shares of Alliance Data Systems during the 2nd quarter valued at approximately $128,000. WFG Advisors LP grew its stake in shares of Alliance Data Systems by 135.9% during the 2nd quarter. WFG Advisors LP now owns 677 shares of the business services provider’s stock valued at $174,000 after acquiring an additional 390 shares during the period. Commonwealth Bank of Australia grew its stake in shares of Alliance Data Systems by 66.6% during the 2nd quarter. Commonwealth Bank of Australia now owns 728 shares of the business services provider’s stock valued at $185,000 after acquiring an additional 291 shares during the period. Finally, Simonbaker & Partners LLC bought a new position in shares of Alliance Data Systems during the 2nd quarter valued at approximately $202,000. Institutional investors own 94.57% of the company’s stock.

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About Alliance Data Systems

Alliance Data Systems Corporation is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a range of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs.

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