11:44 AM EDT, 08/09/2024 (MT Newswires) -- Synchrony Financial ( SYF ) and Bread Financial ( BFH ) are expected to benefit from delays in the Consumer Financial Protection Bureau's late fee rule, which will provide both companies with time to implement pricing and policy adjustments, BofA Securities said in a note Friday.

Both companies have implemented several measures, such as higher interest rates and paper statement fees, "to limit the potential revenue headwind" due to the late fee rule, BofA noted. "The companies will likely 'over earn' until the rule goes into effect."

These delays could boost Synchrony's full-year 2024 earnings per share by 17% and offer near-term upside for investors, the brokerage said.

Additionally, improved credit performance is anticipated for both companies, driven by fundamental and seasonal factors, including declining delinquencies and tighter underwriting, BofA said.

"Better credit and less late fee headwinds should drive EPS upside and we are above consensus for both [Bread Financial ( BFH )] and [Synchrony] in 2025," the brokerage said.

BofA noted that risks remain if the economy faces a hard landing or higher unemployment.

BofA upgraded both Synchrony and Bread Financial ( BFH ) to buy from neutral with a $54 price objective.

Price: 46.14, Change: +0.38, Percent Change: +0.83