Jefferies Met With American Express Management; Here's What Happened Next

In a report published Thursday, Jefferies analysts maintained a Hold rating on

, with a price target of $85, following the company's investor day. American Express continued to project 8% revenue growth, 12% - 15% EPS growth and a 25%+ ROE in FY17 and beyond. The company maintained its guidance of flat to modest EPS compression in FY15 and a return to incremental growth in FY16. In the report Jefferies noted, "While guidance was unchanged, management deconstructed certain underlying assumptions. On the positive side, factors related to the core business remain consistent according to management and they emphasized that its core spend, credit, and processing segments continue to grow at faster rates than the overall industry, while a focus on cost controls and excess capital supporting stock repurchases also should help drive earnings growth." Offsetting the positives were currency and tax-rate headwinds. Moreover, the loss of key affiliate relationships and an increase in marketing expenses could cause volatility in the company's P&L and earnings in the intermediate term. This suggests "lower earnings visibility." "While we are encouraged by the recent initiatives AXP has undertaken (in addition to the recent signing of several new co-brand partners and loyalty programs), we remain on the sidelines as we await signs of success from the incremental growth initiatives and expect potential earnings volatility in coming quarters," the analysts added. The EPS estimates for FY15 and FY16 have been adjusted from $5.50 to $5.48 and from $5.65 to $5.67, respectively, to reflect a larger-than-expected share repurchase program, the company's CCAR approval and "an increase in our forecasted, consolidated tax rate for the company."