) to neutral from outperform.
Analyst Paul Bartolai says Alliance Data Systems generally has been viewed as a transaction processing company that participates in a private label market.
However, he now believes Alliance Data Systems' private label business contributes a much larger portion of its operating profit than originally expected.
While Alliance Data Systems continues to have many favorable investment characteristics, he thinks this stream of earnings per share is more sensitive to changes in credit conditions and should be valued differently than a typical transaction processing company. As a result, Bartolai downgrades and cuts his $50 target to $35.