Optimistic Outlook: Buy Rating on American Express for Strong Growth and Financial Resilience

J.P. Morgan analyst Richard Shane has maintained their bullish stance on AXP stock, giving a Buy rating on April 15.

Richard Shane has given his Buy rating due to a combination of factors that indicate American Express (AXP) has a solid growth trajectory and a strong financial outlook. He bases his optimism on AXP’s ability to stay within its revenue growth guidance of 9-11% year-over-year, despite consensus estimates being at the lower end. Shane believes AXP’s success in maintaining top-line growth targets is crucial for upholding its stock’s valuation multiple. Additionally, he points to the company’s “2024+ Aspiration targets,” which include revenue growth in excess of 10% and mid-teens earnings per share (EPS) growth. Despite the market’s skepticism due to slowing consumer spending and loan growth, Shane is confident in American Express’s ability to manage expenses and meet EPS targets under various economic scenarios.

Furthermore, Shane’s recommendation reflects his expectation of better relative credit performance from high-income borrowers, which is a key demographic for American Express. He anticipates that while credit softness is expected for AXP, it will still outperform its peers. Shane also discusses potential risks, such as higher interest rates and economic stress, but believes AXP’s credit quality will remain robust, evidenced by improvements in delinquency and net charge-off rates. Despite concerns about American Express’s co-brand partnership with Delta due to program changes, Shane views these changes as unlikely to affect financial results until the following year and notes Delta’s plans to increase remuneration from AXP. This comprehensive analysis of AXP’s financial health, growth prospects, and credit performance underpin Richard Shane’s bullish stance on the stock.

In another report released on April 15, KBW also maintained a Buy rating on the stock with a $265.00 price target.

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American Express (AXP) Company Description:

Founded in 1850, American Express Co. is a financial services corporation which provides charge and credit card products, as well as travel-related services worldwide. The company operates through the Global Consumer Services Group, Global Commercial Services, and Global Merchant and Network Services.