American Express: Expect Slower Total Network Volume Growth Into 2024, Says Oppenheimer

Oppenheimer analyst Dominick Gabriele reiterated an Outperform rating on American Express Company AXP, with a price target of $180.

The analyst sees AXP's monthly USCS and U.S. SMB data suggest total network volume is likely to slow from 13.9% to ~10.6% Y/Y.

The sluggishness is due to the U.S. volumes' lackluster performance, as International makes up just ~19% of total network volume. 

Owing to lower volumes, revenue growth is likely to be slightly descending from discount revenue than expected.

Gabriele thinks total U.S. volume is likely to remain slow into 2024 before reaccelerating. 

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The analyst thinks consensus could be low on international volume too.

Gabriele sees an average 1.5% volume reduction to consensus through 2024 on average.

Given an anticipated spending slowdown, the analyst now has 9% growth in 2024. 

However, less loan growth offsets these impacts, leading to less reserve building.

Gabriele expects 2023/2024 EPS to go higher/~flat, given CECL/loan growth dynamics, as the analyst still likes AXP more vs. peers. 

The analyst believes the cyclical backdrop has improved for AXP, and as T&E spending ramps up, there will be a growth in billed business as the economy moves from mid- to late-cycle.

Price Action: AXP shares are trading higher by 1.07% to $173.98 on the last check Friday.