Shares of Bright Horizons Family Solutions (NYSE:BFAM) surged in early trade following UBS’s decision to upgrade the company’s rating from “sell” to “neutral”. This notable shift in perspective comes as the company prepares to release its Q3 results on November 1.
In the second quarter, Bright Horizons reported a non-GAAP EPS of $0.64, surpassing market expectations by $0.03. With this positive financial performance and the upcoming earnings announcement, investor sentiment towards the company has improved.
In today’s early trading session, Bright Horizons shares are up by 0.33% at a price of $78.94. UBS analysts attributed this upward momentum to a more balanced risk/reward ratio, thanks to the recent reduction in consensus EPS estimates for 2024 and the stock’s approximately 20% pullback since August.
“Consensus EPS for 2024 is still ~6% above us, but it has significantly decreased from being ~14% above us previously,” commented UBS. Their own estimates for 2024 place the EPS at $3.18, providing a more reasonable proposition given the reduced consensus estimates. UBS also adjusted their price target for Bright Horizons from $82 to $83, further supporting their upgraded rating of “neutral”.
Year to date, BFAM shares have climbed approximately 20%, demonstrating the company’s resilience and growth over time.