Market Overview

Barclays Adjusts American Express' Model Downwards Following Costco Divorce

Share:

In a report published Friday, Barclays analyst Mark DeVries commented that Costco Wholesale Corporation (NASDAQ: COST) represented a "meaningful" proportion of American Express Company's (NYSE: AXP) business.

Following the separation of the two companies, the analyst was forced to change his American Express estimates downwards.

DeVries explained that in 2014, the Costco U.S. business accounted for roughly eight percent of American Express' total billed business while Costco loans comprised of approximately 20 percent of American Express' worldwide credit card loan book and 10 percent of worldwide card in force.

The analyst explained that American Express' management team said that its 2015 earnings per share will be flat to down year over years as the company will now increase its marketing spend to attract new customers to its other products to offset the lost business from Costco.

However, the analyst reduced his 2015 earnings per share estimate to $5.48 from a previous $6.03 and lowered his 2016 earnings per share estimate to $5.56 from $6.46.

DeVries stated that there could be "incremental" earnings upside to the figures if the Costco U.S. loan portfolio will be sold to the new issuer.

Shares of American Express remain Equal Weight rated with a price target lowered from $96 to $85.

Latest Ratings for AXP

DateFirmActionFromTo
Dec 2020DZ BankDowngradesBuyHold
Nov 2020Morgan StanleyMaintainsOverweight
Oct 2020SusquehannaDowngradesPositiveNeutral

View More Analyst Ratings for AXP
View the Latest Analyst Ratings

 

Related Articles (AXP)

View Comments and Join the Discussion!

Posted-In: AMEX Barclays Costco credit card Mark DeVriesAnalyst Color Analyst Ratings

Latest Ratings

StockFirmActionPT
MRTXHC Wainwright & Co.Maintains257.0
NVDATruist SecuritiesMaintains672.0
NVDASusquehannaMaintains625.0
BLKBMO CapitalMaintains715.0
BLKDeutsche BankMaintains838.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com