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Shares of American Express Company (NYSE:AXP) have lost more than 6 percent since the start of 2018. and one Wall Street analyst said the multiple risks faced by the company are discounted in the stock.
The Analyst
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Nomura Instinet's Bill Carcache upgraded American Express Co. from Neutral to Buy with an unchanged $108 price target.
The Thesis
Nomura Instinet's Buy rating is predicated on, at the very least, the charge card issuer meeting expectations, Carache said in a Monday note. Multiple negative catalysts are priced into the stock at current levels, he said.
The analyst's estimates assume AmEx will suspend its stock buyback for 2018 as it regroups after charges related to the tax legislation signed by President Donald Trump.
Carache named the following as risks for AmEx:
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- Slowing earnings per share growth.
- "Growth math" headwinds.
- An increased reliance on spread lending.
AmEx's positives include the following, Carache said:
- A healthy macroeconomic backdrop.
- Expectations for a stable growth revenue profile ahead.
- Limited co-brand renewal risk in light of recent signings.
AmEx, along with other credit card stocks, is "oversold" — and if the company merely meets the Street's EPS estimates, the stock could move higher by 18 percent and trade at a 13.6x multiple on 2019E EPS, Carache said.
Price Action
Shares of American Express were up nearly 4 percent early Monday afternoon.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.