American Express, IBD Stock Of The Day, Nears Buy Point, Outlook Improves

American Express

American Express

AXP


$0.29



0.1%



39%

IBD Stock Analysis

  • Five week flat base has 307.82 buy point and firm support at 10-week line.

Composite Rating

Industry Group Ranking

Emerging Pattern

Flat Base

* Not real-time data. All data shown was captured at
12:58PM EST on
01/08/2025.

American Express is the IBD Stock Of The Day for Wednesday. The Dow Jones payments giant has received multiple target hikes to start the year with earnings due at the end of the month.




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Barclays on Monday lifted its price target on American Express (AXP) to 280 from 257 and kept an equal weight rating on shares, noting a positive outlook heading into 2025, The Fly reported. Key themes include a stable consumer, improving consumer credit trends, an easing regulatory backdrop and higher-for-longer mortgage rates.

Truist on Monday also initiated coverage of American Express with a buy rating and 350 price target. The company has competitive advantages and favorable long-term markets factors, including a loyal high-end customer base and international reach, Truist analysts said. Those traits should outweigh some “recent questions that have started rising around sustainable growth,” the firm wrote.

Deutsche Bank on Friday wrote that the November election appears to have “rekindled animal spirits” and boosted consumer confidence in anticipation of a more pro-business political environment. Trump’s plans for looser regulations have raised expectations for the U.S. economy, but lowered views for further Federal Reserve easing, according to the firm. The bank believes this bodes well for stocks levered to consumer credit rather than the mortgage market. Deutsche Bank raised its price target on AXP to 371 from 310 and maintained a buy rating on the stock.

Elsewhere, Wells Fargo is constructive on consumer finance stocks. Modestly higher interest rates should not serve as a deterrent for fundamentals or the stocks, the firm wrote. Wells said it has “high conviction” the rally for credit issuers … will resume. The firm lifted its price target on American Express to 340 from 300 and kept an overweight rating on the stock.

Earnings Growth

Meanwhile, American Express has averaged 22% earnings growth and 10.7% revenue growth over the last three quarters, although gains have slowed.

For Q3, American Express reported a 6% earnings gain to $3.49 per share adjusted, to beat FactSet expectations of $3.29. Revenue rose 8% to $16.64 billion, but fell short of views for $16.67 billion.

AmEx noted that Q3 card member spending increased 6%, while card fee revenue grew 18%. American Express also added 3.3 million new card members during the quarter.

The payments giant increased its provision for credit losses to $1.4 billion, from $1.2 billion last year.

American Express lifted its 2024 guidance on the news. The payments giant now expects earnings per share to range from $13.75 to $14.05, compared to its previous outlook of $13.30 to $13.80. It maintained its revenue forecast for about 9% revenue growth, which would equate to about $65.95 billion.

The lifted guidance topped FactSet expectations for full-year earnings of $13.62 per share on $66.03 billion in revenue. Analysts have since upped their estimates to earnings of $13.93 per share for the year. However, revenue forecasts were lowered to $65.94 billion.

American Express releases Q4 results on Jan. 24. Analysts forecast a nearly 16% increase in earnings to $3.03 per share on 8.6% revenue growth to $17.16 billion.

Net interest income is seen jumping 13% to about $4.09 billion. FactSet expects net card fees to rise to $2.23 billion from $1.9 billion last year.

American Express Stock

AXP stock is nearing a 307.82 buy point for a six-week flat base, which matches American Express’ record high from Nov. 27.

Shares have traded tightly since late November and are finding support along their 21-day exponential moving average and 10-week line.

The relative strength line for American Express has hit a 52-week high, and AXP stock has an 89 RS Rating.

Rivals Mastercard (MA) and Visa (V) have also pulled back from their recent record highs after their breakouts in September and October, respectively.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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