Will This Target Price Increase Help Alliance Data Systems (ADS) Today?

NEW YORK (TheStreet) -- Deutsche increased its target price on Alliance Data Systems  (ADS) to $330, increased its estimates and set a "buy" rating. The firm noted the the company can gain market share and accelerate growth.

The stock was up 0.29% to $285.23 at 9:38 a.m. on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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Separately, TheStreet Ratings team rates ALLIANCE DATA SYSTEMS CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALLIANCE DATA SYSTEMS CORP (ADS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, compelling growth in net income, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 20.8%. Since the same quarter one year prior, revenues rose by 17.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ALLIANCE DATA SYSTEMS CORP has improved earnings per share by 40.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALLIANCE DATA SYSTEMS CORP increased its bottom line by earning $7.43 versus $6.60 in the prior year. This year, the market expects an improvement in earnings ($12.25 versus $7.43).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 40.9% when compared to the same quarter one year prior, rising from $83.66 million to $117.87 million.
  • Powered by its strong earnings growth of 40.94% and other important driving factors, this stock has surged by 77.28% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • 40.31% is the gross profit margin for ALLIANCE DATA SYSTEMS CORP which we consider to be strong. Regardless of ADS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ADS's net profit margin of 10.32% is significantly lower than the industry average.
  • You can view the full analysis from the report here: ADS Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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