Market Overview

Morgan Stanley Analyst: American Express Antitrust Reaction 'Overdone'

Share:
Morgan Stanley Analyst: American Express Antitrust Reaction 'Overdone'

American Express Company (NYSE: AXP) loss of a federal antitrust lawsuit won't hurt its business, an analyst said Thursday.

Morgan Stanley's Cheryl M. Pate said that in practice, merchants have long ignored language in their American Express contracts that bar them from steering customers to lower-priced cards.

A judge ruled Thursday that the contract language violates antitrust law, and American Express vowed to appeal.

American Express closed Thursday at $78.40, down $1.38. The shares are off more than 7 percent since last week when the company said it lost an exclusive credit card deal with Costco Wholesale Corporation (NASDAQ: COST).

But market reaction to the antitrust ruling Thursday is "overdone," according to Pate, who maintained an Overweight rating Thursday.

U.S. merchants' acceptance of American Express cards rose to 73 percent in 2014, from 68 percent a year earlier, according to data released Thursday by Nielsen Co.

Pate attributed the gain to the rollout six months ago of American Express' OptBlue card, which is aimed at smaller merchants and priced on a par with MasterCard and Visa.

"OptBlue merchants don't have an incentive" to steer customers to other cards, Pate said.

"We believe the U.S. consumer is poised for their best year of the recovery," Pate said, suggesting that this offers upside to the outlook for American Express billings.

Among 32 analysts following American Express, 16 maintain Hold ratings and 14 are at Buy; one is at Overweight and one at Underweight, according to FactSet.

Latest Ratings for AXP

DateFirmActionFromTo
Oct 2019MaintainsOverweight
Oct 2019MaintainsMarket Perform
Jul 2019MaintainsNeutral

View More Analyst Ratings for AXP
View the Latest Analyst Ratings

Posted-In: Cheryl M. Pate Morgan StanleyAnalyst Color News Contracts Reiteration Legal Analyst Ratings Best of Benzinga

 

Related Articles (COST + AXP)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
VIACJP MorganReinstates50.0
NUVASVB LeerinkMaintains92.0
SRPTCantor FitzgeraldMaintains211.0
SRPTPiperJaffrayMaintains210.0
LULUGoldman SachsMaintains219.0
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.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
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

Sugar Little Changed

Apple Need Not Worry About Samsung's 'Totally Useless' Acquisition