Press Release: Research Reveals Stress Peaks For Working Parents During The Holiday Season

What Happened?

A number of stocks fell in the afternoon session after new economic data intensified market agitation ahead of the Federal Reserve's policy decision later in the week. 

According to the Bureau of Economic Analysis, real consumer spending, which is adjusted for inflation, stalled in September, marking its weakest performance in four months. Compounding the issue, the University of Michigan's consumer sentiment index, while slightly improved, remained gloomy, with one economist noting that many households faced affordability issues forcing them to be more cautious. This pressure on consumers was reflected in the market, where the Consumer Discretionary sector was among the leading decliners. The broader economic picture showed other signs of caution, as new orders for U.S. factory goods also increased less than anticipated. These indicators collectively suggest a widening slowdown across both consumer and industrial sectors as the Federal Reserve prepared to announce its final policy actions for the year.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Apparel and Accessories company Levi's fell 2.7%. Is now the time to buy Levi's? Access our full analysis report here, it’s free for active Edge members.
• Education Services company Bright Horizons fell 3.1%. Is now the time to buy Bright Horizons? Access our full analysis report here, it’s free for active Edge members.
• Education Services company Universal Technical Institute fell 3%. Is now the time to buy Universal Technical Institute? Access our full analysis report here, it’s free for active Edge members.
• Education Services company Laureate Education fell 2.7%. Is now the time to buy Laureate Education? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Bright Horizons (BFAM)

Bright Horizons’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 17 days ago when the stock gained 3.5% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

Bright Horizons is down 9.9% since the beginning of the year, and at $99.56 per share, it is trading 24.3% below its 52-week high of $131.50 from May 2025. Investors who bought $1,000 worth of Bright Horizons’s shares 5 years ago would now be looking at an investment worth $590.51.

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official bolstered hopes for an interest rate cut. 

New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Leisure Products company Acushnet jumped 3.4%. Is now the time to buy Acushnet? Access our full analysis report here, it’s free for active Edge members.
• Media company Warner Music Group jumped 3.3%. Is now the time to buy Warner Music Group? Access our full analysis report here, it’s free for active Edge members.
• Apparel and Accessories company Levi's jumped 3.4%. Is now the time to buy Levi's? Access our full analysis report here, it’s free for active Edge members.
• Wireless, Cable and Satellite company Sirius XM jumped 3.3%. Is now the time to buy Sirius XM? Access our full analysis report here, it’s free for active Edge members.
• Education Services company Bright Horizons jumped 3.5%. Is now the time to buy Bright Horizons? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Bright Horizons (BFAM)

Bright Horizons’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 18 days ago when the stock dropped 5.3% on the news that analysts at Goldman Sachs and BMO Capital lowered their price targets on the company's shares. The price target cuts occurred even though Bright Horizons reported strong third-quarter results that beat expectations and raised its full-year guidance. Goldman Sachs reduced its price target to $130 from $146, while BMO Capital lowered its target to $124 from $130. Both firms kept their positive ratings on the stock. The company's results were driven by its high-margin back-up care segment, which grew 26% from the previous year. BMO Capital noted its adjustment was to "reflect more current multiples," suggesting that despite the company's solid performance, the firm revised its valuation of the stock downward.

Bright Horizons is down 8.6% since the beginning of the year, and at $101.10 per share, it is trading 23.1% below its 52-week high of $131.50 from May 2025. Investors who bought $1,000 worth of Bright Horizons’s shares 5 years ago would now be looking at an investment worth $602.51.

Bright Horizons delivered third-quarter results that exceeded Wall Street’s expectations, reflecting robust demand for its suite of child care and education benefits. Management pointed to strong performance in back-up care, which experienced broad-based demand from both new and existing clients, particularly during the summer months when school-age programs were in high use. CEO Stephen Kramer credited the company’s ability to attract more users and increase repeat utilization as critical to the quarter’s outperformance. Additionally, margin improvement was supported by operating leverage across segments, with disciplined cost management and new center openings further contributing to results.

Is now the time to buy BFAM? Find out in our full research report (it’s free for active Edge members).

Bright Horizons (BFAM) Q3 CY2025 Highlights:

• Revenue: $802.8 million vs analyst estimates of $780.2 million (11.6% year-on-year growth, 2.9% beat)
• Adjusted EPS: $1.57 vs analyst estimates of $1.32 (18.9% beat)
• Adjusted EBITDA: $156.1 million vs analyst estimates of $138 million (19.4% margin, 13.1% beat)
• Management raised its full-year Adjusted EPS guidance to $4.51 at the midpoint, a 7.3% increase
• Operating Margin: 15.1%, up from 12.4% in the same quarter last year
• Organic Revenue rose 11.1% year on year vs analyst estimates of 7.8% growth (325.5 basis point beat)
• Market Capitalization: $5.70 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Bright Horizons’s Q3 Earnings Call

• Andrew Steinerman (JPMorgan) questioned the sustainability of back-up care growth, and CFO Elizabeth Boland responded that while current growth is above historic rates, long-term expectations are for low double-digit expansion as penetration increases.

• Keen Fai Tong (Goldman Sachs) asked about potential catalysts for reaccelerating full service enrollment. Boland explained that internal initiatives, such as targeted marketing and improved registration processes, are being implemented, but external economic and return-to-office trends also play a role.

• Jeffrey Meuler (Baird) inquired about tuition pricing plans for next year, with Boland confirming a planned 4% average increase, tailored locally to market conditions and occupancy levels.

• Toni Kaplan (Morgan Stanley) raised concerns about the impact of client layoffs on Bright Horizons’ business. CEO Stephen Kramer emphasized that low penetration among eligible employees and multi-year client contracts should mitigate any near-term effects.

• Joshua Chan (UBS) asked how Bright Horizons manages capacity for back-up care during periods of unexpectedly high demand. Kramer explained that the company uses data analytics and provider network management to match supply and demand, leveraging both owned centers and partner facilities.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace of back-up care adoption and whether Bright Horizons can increase both user penetration and frequency, (2) the effectiveness of tuition pricing strategies in offsetting cost pressures, and (3) the impact of center closures and capacity optimization on overall margin performance. Progress in the U.K. business and further client wins in education advisory will also be key indicators of execution.

Bright Horizons currently trades at $100.25, up from $92.36 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

The Best Stocks for High-Quality Investors

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return).

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