Market Overview

The Risks For American Express Are Priced In, Analyst Says In Upgrade

The Risks For American Express Are Priced In, Analyst Says In Upgrade
Related AXP
Benzinga's Top Upgrades, Downgrades For July 20, 2018
Wall Street Appears Set For A Pause After Recent Gains
Is This Ubiquitous Stock Worth Your Time? (GuruFocus)

Shares of American Express Company (NYSE: AXP) have lost more than 6 percent since the start of 2018. and one Wall Street analyst said the multiple risks faced by the company are discounted in the stock.

The Analyst

Nomura Instinet's Bill Carcache upgraded American Express Co. from Neutral to Buy with an unchanged $108 price target.

The Thesis

Nomura Instinet's Buy rating is predicated on, at the very least, the charge card issuer meeting expectations, Carache said in a Monday note. Multiple negative catalysts are priced into the stock at current levels, he said. 

The analyst's estimates assume AmEx will suspend its stock buyback for 2018 as it regroups after charges related to the tax legislation signed by President Donald Trump. 

Carache named the following as risks for AmEx:

  • Slowing earnings per share growth.
  • "Growth math" headwinds.
  • An increased reliance on spread lending.

AmEx's positives include the following, Carache said: 

  • A healthy macroeconomic backdrop.
  • Expectations for a stable growth revenue profile ahead.
  • Limited co-brand renewal risk in light of recent signings.

AmEx, along with other credit card stocks, is "oversold" — and if the company merely meets the Street's EPS estimates, the stock could move higher by 18 percent and trade at a 13.6x multiple on 2019E EPS, Carache said. 

Price Action

Shares of American Express were up nearly 4 percent early Monday afternoon.

Related Links:

Buy American? American Express Recovery Is Not Without Its Risks

8 Stocks To Play The Bank Deregulation Bill

Latest Ratings for AXP

Jul 2018DZ BankUpgradesHoldBuy
Jul 2018BMO CapitalMaintainsMarket PerformMarket Perform
Jun 2018BuckinghamUpgradesNeutralBuy

View More Analyst Ratings for AXP
View the Latest Analyst Ratings

Posted-In: Bill Carcache credit card credit card stocks Nomura InstinetAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (AXP)

View Comments and Join the Discussion!