The American Express Analyst
Stephen Biggar upgraded American Express from Hold to Buy with a $130 price target.
The American Express Thesis
American Express' stock has fallen 22% over the past week which is worse than the S&P 500's 15% decline, Biggar wrote in the note. While American Express' first quarter report is likely to come in worse than expected, the credit card company should see growth in spending volumes later on in the year as coronavirus concerns ease.
Economic tailwinds like ongoing jobs and wage growth would likely come back into focus, along with the growing trend of cash payments shifting to digital channels, the analyst wrote. Also, American Express is "liability-sensitive" which implies it stands to benefit in a lower interest rate environment.
Management will host an investor day presentation on March 17 at which point investors may be treated to more detailed financial guidance and growth objectives.
American Express's stock weakness has brought shares to a multiple of 12.2 times 2020 EPS estimates. This represents a discount to a "reasonable" multiple of 14.7 times 2020 EPS, or $130 per share.
AXP Price Action
Shares of American Express were trading higher by 0.76% Monday afternoon at $110.42.