Improving fundamentals in CY18
Despite a disappointing Q4, underlying guidance for CY18 remains unchanged and each segment should demonstrate improving trends this year. We model adjusted EPS growth doubling to ~17% (before tax reform benefits), helped by a flattening credit card loss rate, more stable margins and improved BrandLoyalty visibility. We remain Overweight and increase our 12-month PT to $315. This requires a 12x forward PE, in the middle of the two year range, and is supported by a DCF and SOTP.Alliance Data Systems is a provider of data-driven marketing and loyalty solutions. The company operates in two segments: LoyaltyOne? and Card Services. LoyaltyOne provides coalition and short-term loyalty programs through the Canadian AIR MILES? Reward Program and BrandLoyalty Group B.V. Card Services encompasses credit card processing, billing and payment processing, customer care and collections services for private label retailers as well as private label and co-brand retail credit card and loan receivables financing, including securitization and other funding of certain credit card and loan receivables that it underwrites from its private label and co-brand retail credit card programs.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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