Despite Share Gains, Why Analysts Keep Lowering Amex Targets and Estimates
American Express came through its earnings report, and its shares were up both on Friday and again on Monday.
Earnings season has been mixed for financial companies, but the pure-play banks with investment banking, investment management and other loan and interest exposure saw their shares sell off. It turns out that American Express Co. (NYSE: AXP | AXP Price Prediction) came through its earnings report, and its shares were up both on Friday and again on Monday.
The independent credit card issuer said it had $1.98 in earnings per share (EPS) and $10.31 billion in revenue, while consensus estimates were $1.43 in EPS and $10.65 billion in revenue. The same period of last year reportedly had EPS of $2.01 on $10.49 billion in revenue. American Express noted that weakness reflected softness in spending volumes beginning in the past few days of February that significantly accelerated in March as a result of COVID-19 impacts.
Wall Street analysts are continuing to lower expectations. Amex disclosed that loss provisions of $2.6 billion were up $809 million from a year ago. The increase was driven primarily by significant reserve builds of $1.7 billion, which reflect deterioration of the global estimated macroeconomic outlook due to COVID-19 impacts.
BofA Securities maintained its Neutral rating and its $104 price objective after earnings. The firm also handily brought down earnings estimates to $4.46 EPS (from $5.79 EPS) for 2020 and $6.77 EPS (from $6.48) for 2021.
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CFRA maintained its Hold rating with a target price of $96, but the firm lowered its 2020 EPS estimate to $6.05 from $7.68 and its 2021 EPS expectations to $7.80 from $8.46.
Oppenheimer started Amex with an Outperform rating and a $100 price target.
Other analyst ratings were soon on American Express as well:
- BMO Capital Markets maintained it as Market Perform but lowered its target price to $95 from $115
- Compass Point slashed its target price to $78 from $140.
- Credit Suisse maintained its Underperform rating and lowered its target to $85 from $90.
- Deutsche Bank maintained its Buy rating but lowered its target from $112 to $108.
- Piper Sandler lowered its target price to $106 from $119.
- Susquehanna maintained it as Buy but lowered its target from $135 to $120.
American Express stock traded up 0.5% at $83.68 on Monday, in a 52-week range of $67.00 to $138.13. Its consensus analyst price target from Refinitiv was $104.52, down from $106.87 a day ahead of the earnings report.
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Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
