What Happened?

Shares of child care and education company Bright Horizons (NYSE: BFAM) fell 19.3% in the morning session after it issued a weak financial forecast for 2026 that overshadowed its fourth-quarter earnings beat. 

Although the child care provider's fourth-quarter adjusted earnings and revenue came in ahead of analyst estimates, investors focused on the disappointing outlook. For the full year 2026, Bright Horizons guided for revenue in a range of $3.075 billion to $3.125 billion and adjusted earnings per share between $4.90 and $5.10. The midpoint of both forecasts fell short of what Wall Street had predicted, signaling potential challenges ahead.

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What Is The Market Telling Us

Bright Horizons’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Bright Horizons and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 3 months 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 34.7% since the beginning of the year, and at $64.80 per share, it is trading 50.7% 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 $356.66.

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