Macquarie Sees 'Significant' Downside at American Express

Loading...
Loading...
Macquarie downgraded American Express Company
AXP
Tuesday from Neutral to Underperform and cut its price target from $81 to $76. Analysts Vincent Caintic and Edward Odre expressed concern that the company's March investor day was rescheduled to the 25th of the month, CCAR may be negative and that a settlement in an anti-steering lawsuit could be challenging. At this time, the analysts only saw 7 percent upside potential for the stock n a bull case scenario. To see the upside, however, expectations would "need to return to those prior to 4Q14 results, namely 8 percent y/y revenue growth and 12-15 percent y/y EPS growth." Caintic added that even if the stock made it back to the $88 level last seen prior to 4Q14, the firm would likely maintain its Underperform rating because growth was expected to be limited for the next two years. The analysts thought the downside was "significant" and could be as much as 21 percent as the company "loses its premium multiple as a growth story with strong margins." The analysts reduced EPS estimates for 2015 through 2016 due to an expected lower capital return and felt that an SOTP valuation put the stock at $76 to $83. The firm estimated adjusted EPS for 2015 at $5.39 and for 2016 at $5.63. Consensus was $5.51 and $5.80, respectively. Caintic concluded that before getting constructive, the firm would look for evidence of the company "growing card spend alongside profitability expansion." American Express Company recently traded at $81.22, down 0.99 percent.
Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: DowngradesPrice TargetAnalyst RatingsEdwards OdreMacquarieVincent Caintic
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...