Bright Horizons Family Solutions' (BFAM) 2026 guidance reflects challenging industry dynamics and weak enrollment growth, supporting the thesis that returning to pre-COVID utilization level will not happen in the near future, Morgan Stanley said in a Friday research note.

Occupancy is expected to remain in the mid-60's percentages by the end of 2026, with about 100 basis points of enrollment growth, and net-closures are enough to move the needle back towards the 70% to 80% occupancy pre-COVID mark, Morgan Stanley said.

Bright Horizons Family Solutions anticipates 2026 to be a net negative year for center openings as new openings are slated to trail expected closings by 25 to 30 centers after 2025 ended at net negative 9 centers, Morgan Stanley noted.

Morgan Stanley said that the company's 2026 revenue guidance of $3.08 billion to $3.13 billion, implies a midpoint of 5.7% that fell 80 to 100 basis points short of estimates and translates to 3.5%-4.5% of Full-Service growth, 11-13% of Back-up growth, and mid-single digit Ed-Advisory growth.

The firm adjusted its price target on Bright Horizons Family Solutions to $70 from $93 and maintained its underweight rating.

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