Oppenheimer Not Excited About American Express

Oppenheimer on Tuesday issued a report on

downgrading the financial services company from Perform to Underperform and set a price target of $68.00. Analysts Ben Chittenden and Chris Kotowski wrote, "We think that the profitability of the core business is under pressure and management seems more concerned with EPS growth than anything else. If operating earnings are under pressure and the heavy lifting for the EPS growth comes from share buybacks we believe investors will be unwilling to pay the same multiple as they used to. For this reason we think that both earnings expectations and the multiple will be under pressure over the next 12-18 months." Oppenheimer believes that the profitability of global card services, one of the main business segments of American Express, will be under pressure due to a combination of a more competitive environment and a declining number of total cards outstanding. In a move to retain customers, American Express has publicly stated that it plans on accelerating marketing and rewards. However, because this is a typical strategic move by many companies in the marketplace, this won't likely give American Express a competitive advantage. Shares of American Express closed Monday at $79.63.