Alliance Data Systems (ADS) Hits New 12-Month Low Following Analyst Downgrade

Alliance Data Systems Co. (NYSE:ADS) reached a new 52-week low during trading on Tuesday after SunTrust Banks lowered their price target on the stock to $250.00. SunTrust Banks currently has a buy rating on the stock. Alliance Data Systems traded as low as $189.23 and last traded at $195.23, with a volume of 24917 shares traded. The stock had previously closed at $192.98.

A number of other brokerages also recently issued reports on ADS. Deutsche Bank set a $253.00 price target on shares of Alliance Data Systems and gave the stock a “buy” rating in a research report on Thursday, September 20th. Stephens downgraded shares of Alliance Data Systems from an “overweight” rating to an “equal” rating and set a $288.00 price target on the stock. in a research report on Monday, September 17th. They noted that the move was a valuation call. Bank of America assumed coverage on shares of Alliance Data Systems in a research report on Monday, September 17th. They issued a “buy” rating and a $290.00 price target on the stock. Oppenheimer restated a “hold” rating on shares of Alliance Data Systems in a research report on Friday, October 5th. Finally, Zacks Investment Research upgraded shares of Alliance Data Systems from a “hold” rating to a “buy” rating and set a $261.00 price target on the stock in a research report on Wednesday, July 25th. Two research analysts have rated the stock with a sell rating, eight have issued a hold rating and thirteen have issued a buy rating to the company. Alliance Data Systems currently has an average rating of “Hold” and an average target price of $257.21.

In related news, insider Valueact Capital Master Fund, sold 675,000 shares of the business’s stock in a transaction on Tuesday, November 6th. The shares were sold at an average price of $200.00, for a total transaction of $135,000,000.00. The transaction was disclosed in a filing with the SEC, which is available at this hyperlink. 2.60% of the stock is owned by insiders.

Several institutional investors have recently added to or reduced their stakes in ADS. FMR LLC lifted its position in shares of Alliance Data Systems by 45.3% during the 2nd quarter. FMR LLC now owns 2,595,591 shares of the business services provider’s stock valued at $605,293,000 after acquiring an additional 809,427 shares during the period. Parnassus Investments CA lifted its position in shares of Alliance Data Systems by 42.3% during the 2nd quarter. Parnassus Investments CA now owns 1,245,000 shares of the business services provider’s stock valued at $290,334,000 after acquiring an additional 370,000 shares during the period. Waddell & Reed Financial Inc. lifted its position in shares of Alliance Data Systems by 83.4% during the 2nd quarter. Waddell & Reed Financial Inc. now owns 729,218 shares of the business services provider’s stock valued at $170,054,000 after acquiring an additional 331,500 shares during the period. Nomura Holdings Inc. lifted its position in shares of Alliance Data Systems by 4,390.2% during the 2nd quarter. Nomura Holdings Inc. now owns 247,993 shares of the business services provider’s stock valued at $57,831,000 after acquiring an additional 242,470 shares during the period. Finally, ValueAct Holdings L.P. lifted its position in shares of Alliance Data Systems by 3.5% during the 2nd quarter. ValueAct Holdings L.P. now owns 6,082,646 shares of the business services provider’s stock valued at $1,418,473,000 after acquiring an additional 205,246 shares during the period. Institutional investors own 94.63% of the company’s stock.

The company has a debt-to-equity ratio of 7.32, a quick ratio of 2.38 and a current ratio of 2.41. The stock has a market cap of $10.79 billion, a PE ratio of 10.53, a price-to-earnings-growth ratio of 0.75 and a beta of 1.71.

Alliance Data Systems (NYSE:ADS) last released its earnings results on Thursday, October 18th. The business services provider reported $6.26 earnings per share (EPS) for the quarter, beating the Zacks’ consensus estimate of $6.19 by $0.07. The company had revenue of $2.02 billion for the quarter, compared to the consensus estimate of $2.03 billion. Alliance Data Systems had a net margin of 12.11% and a return on equity of 56.33%. Alliance Data Systems’s quarterly revenue was up 5.4% compared to the same quarter last year. During the same quarter in the previous year, the company earned $5.35 EPS. On average, equities research analysts expect that Alliance Data Systems Co. will post 21.53 earnings per share for the current year.

The firm also recently declared a quarterly dividend, which will be paid on Wednesday, December 19th. Shareholders of record on Wednesday, November 14th will be paid a dividend of $0.57 per share. The ex-dividend date of this dividend is Tuesday, November 13th. This represents a $2.28 dividend on an annualized basis and a yield of 1.18%. Alliance Data Systems’s dividend payout ratio (DPR) is presently 12.47%.

Alliance Data Systems announced that its Board of Directors has approved a share buyback plan on Monday, July 30th that allows the company to buyback $500.00 million in shares. This buyback authorization allows the business services provider to reacquire up to 4% of its stock through open market purchases. Stock buyback plans are generally a sign that the company’s management believes its stock is undervalued.

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Alliance Data Systems Company Profile (NYSE:ADS)

Alliance Data Systems Corporation provides data-driven marketing and loyalty solutions worldwide. It operates through three segments: LoyaltyOne, Epsilon, and Card Services. 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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