Q: And the stock?

A: On an earnings-per-share basis, I think that Alliance Data Systems is well on target to earn in excess of $5 a share this year. More importantly, I think they are going to earn probably close to $6.50 in calendar-year 2010. With that in mind, I think this $60 stock could soon easily trade into the 80s.

14.3

The Dallas-based marketing and transaction services company announced a new $1.3 billion buyback plan. This program is in addition to the company’s previously announced $500 million repurchase plan, bringing the total authorized repurchase amount up to $1.8 billion. The repurchases will be completed before the end of 2009.

Since the beginning of the year, Alliance Data has repurchased about 12 million shares worth $725 million, or roughly 15% of outstanding shares.

Ed Heffernan, the company’s CFO said, "We believe we have a unique opportunity to use both the low existing leverage of the Company as well as its high free cash flow generation to potentially repurchase as much as 35-40 percent of our existing share base at attractive prices.”

For the second-quarter ended June 30th, ADS reported a 6% gain in profit. Net income rose to $46.9 million, or 60 cents a share, from $44.1 million or 55 cents a share in the same period last year. Revenue jumped to $507.2 million from $481.8 million, an increase of 5%.

Since the company out-performed estimates in the first six months of the year, they had to increase its expectations for the full year. Alliance Data now expects to earn $4.35 a share for the full year 2008, up from $4.30 a share. Analysts polled by Thomson Financial are anticipating earnings of $4.31 a share.

SunTrust Robinson Humphrey remains bullish on Alliance Data. Analysts at the firm reiterated their buy rating on the stock and inflated their price target $10 to $75. They recommend ADS because the company offers a competitive advantage in its analytics-based targeted marketing and loyalty solutions, which should provide above-average organic revenue growth. They were also positive on the enlarged buyback plan which could add $0.15-$0.20 to 2009 EPS and 2-3% to FCF/share.

The Dallas-based marketing and transaction services company announced a new $1.3 billion buyback plan. This program is in addition to the company’s previously announced $500 million repurchase plan, bringing the total authorized repurchase amount up to $1.8 billion. The repurchases will be completed before the end of 2009.

Since the beginning of the year, Alliance Data has repurchased about 12 million shares worth $725 million, or roughly 15% of outstanding shares.

Ed Heffernan, the company’s CFO said, "We believe we have a unique opportunity to use both the low existing leverage of the Company as well as its high free cash flow generation to potentially repurchase as much as 35-40 percent of our existing share base at attractive prices.”

For the second-quarter ended June 30th, ADS reported a 6% gain in profit. Net income rose to $46.9 million, or 60 cents a share, from $44.1 million or 55 cents a share in the same period last year. Revenue jumped to $507.2 million from $481.8 million, an increase of 5%.

Since the company out-performed estimates in the first six months of the year, they had to increase its expectations for the full year. Alliance Data now expects to earn $4.35 a share for the full year 2008, up from $4.30 a share. Analysts polled by Thomson Financial are anticipating earnings of $4.31 a share.

SunTrust Robinson Humphrey remains bullish on Alliance Data. Analysts at the firm reiterated their buy rating on the stock and inflated their price target $10 to $75. They recommend ADS because the company offers a competitive advantage in its analytics-based targeted marketing and loyalty solutions, which should provide above-average organic revenue growth. They were also positive on the enlarged buyback plan which could add $0.15-$0.20 to 2009 EPS and 2-3% to FCF/share.

Dallas' transaction services company announced that its board reinstituted its stock buyback program. The company is authorized to repurchase up too $500 million in common stock. Alliance Data currently has approximately 78.5 million shares outstanding.


The company is also revising its capital structure to determine if the company is using enough debt to maximize the firm's value. Decisions regarding the amount of leverage will be made over the next few months.


Alliance Data's chief financial officer, Ed Heffernan, said "Following the termination of the merger agreement, our focus has been on two items that we believe are critical for future success - liquidity and earnings visibility.”


After Alliance reported strong first quarter results, SunTrust Robinson Humphrey reiterated their buy rating on the stock and set the price target at $65. The analysts believe ADS is well positioned to outperform in 2008 and raised their revenue and EPS estimates to reflect that. They expect 2008 revenue of $2.19 billion and EPS of $4.34 a share.

Noonday Asset Management and its Farallon Capital Management affiliate reduced their holdings to 3.9 million shares (4.9%), from the 5.49 million shares (6.9%) that they had reported owning on March 13.

Alliance Data (ADS) was upgraded from Peer Perform to Outperform, Bear Stearns said. $66 price target. Company posted solid fourth quarter results, and the stock should resume multiple expansion now that the Blackstone deal is done.

Alliance Data (ADS) was downgraded from Buy to Neutral, Suntrust Robinson Humphrey said. Risk is increasing that the Blackstone buyout will not go through at current levels.

Noonday Asset Management raised its holdings to 7.8 million shares (9.9%), from the 6.23 million (7.9%) it reported owning on Nov. 16.

"Goldman's strategists have taken the mystery out of the trade by compiling a list of 10 stocks with elevated volatility. In the U.S., they like AT&T (T), Johnson & Johnson (JNJ) and PepsiCo (PEP). In the international markets -- and these may be harder for U.S. investors to trade -- Goldman likes selling puts on Bayer (ADS), Phillips, Telefonica, Vimpelcom, Wharf, Hitachi CM and Hutchison Whampoa."