Piper Jaffray Reiterates Neutral Rating, $136 PT on Alliance Data Systems

In a report published Wednesday, Piper Jaffray & Co. reiterated its Neutral rating and $136.00 price target on Alliance Data Systems

. Piper Jaffray noted, “This morning, ADS reported solid monthly Private Label data for July. Losses continue to trend lower, hitting 4.7%, which is down from 6.2% during the year-ago period. Losses have been an important tailwind for ADS in recent years, averaging 4.9% during 2Q12, which was below our model at 5.2%. We model 4.8% losses for 3Q12. 30+ day delinquents fell 70 bps Y/Y to 4.0% during July, and averaged 3.9% during 2Q12. ADS averaged $5.7B of receivables during July, which represents 18% Y/Y growth. Average receivables grew 13% Y/Y during 2Q12 to $5.5B. We believe the file is poised for growth during 2H12 and 2013 following a strong 2Q12 and the recent Bon Ton deal announcement (3Q12 expected close). Overall, Private Label trends remain strong. However, we believe the story, which has been focused on improving credit losses, is becoming about portfolio growth.” Alliance Data Systems closed on Tuesday at $134.57.