UPDATE: Goldman Sachs Upgrades American Express, 'See Several Micro Drivers To Growth'

Analysts at Goldman Sachs on Wednesday upgraded American Express Company (NYSE: AXP) from Neutral to Buy and set a price target of $102 for the stock.

Goldman Sachs analysts are expecting 5 percent earnings growth for American Express in 2015, 3 percent above consensus estimates.

“We see several micro drivers to growth, including increased customer acquisition from reinvesting two large gains in 2014 (travel JV, Concur), share gains in lending (8.4% market share) as it narrows the gap between spend and lend market share, incremental growth from several key initiatives (Loyalty Partner, OptBlue, pre-paid) and continued containment of operational expenditure.”

Goldman also expects American Express to return 90 percent of its capital to shareholders.

Potential Upside

American Express shares were recently up about 1.4 percent at $89.63. Goldman’s $102 price target represents about a 13.2 percent upside from recent levels. American Express has lagged the overall market in the past year, gaining less than one percent.

Fundamental Perspective

While American Express’ price-to-earnings ratio (P/E) of 16.5 is not particularly impressive, its forward P/E of 14.6, as well as its price to free cash flow (P/FCF) of 13.7, indicate that the stock is a potential value.

One possible cause for concern for shareholders of American Express is the company’s debt. American Express’ current debt-to-equity ratio of 5.0 is much higher than rivals Visa and Mastercard’s debt levels.