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Tags: Alliance | Data | advertising | ADS

Alliance Data Mines Advertising Niche

By    |   Wednesday, 11 January 2012 06:58 AM EST

Wooing consumers with highly targeted ad messages is big business. Alliance Data Systems (ADS) is making record sales mining this niche. The Dallas-based firm excels at offering transaction, marketing and credit card programs. Accordingly, its stock soared nearly 50 percent in 2011.

All of Alliance Data’s three segments are going strong. The Epsilon multichannel marketing franchise has more than 2,200 customers and it’s slated to grow 20 percent annually for the next few years. Its LoyaltyOne segment, which offers loyalty programs in Canada, has targeted fast-growing Brazil for further gains.

Finally, its private-label credit program, which manages about 90 cards for firms such as Ann Taylor (ANN) and Pottery Barn, keeps adding acquisitions.

With such savvy brand management, each Alliance Data segment is forecast to top $1 billion in sales in 2012, as more outfits mine customer data to propel sales growth.

Alliance Data’s third-quarter revenues rose 20 percent to $845 million versus $702 million a year ago. Net income soared 77 percent.

Alliance Data CEO Ed Heffernan added that the outlook for 2012 is bullish too. The firm also plans to pass on its good fortune to stockholders, by buying back $400 million in stock.

Fully valued

Alliance Data’s main drawback is its high stock price. Of the 20 analysts followed by Thomson/First Call, six have strong buy recommendations and four have buys, with 10 holds.

Nomura Securities’ analysts have a neutral rating, citing what it calls Alliance Data’s fully valued shares. But, analysts also praise the three, great core businesses.

The company reports next on Feb. 2.

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Wednesday, 11 January 2012 06:58 AM
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