Given the coronavirus-related headwinds and rising economic uncertainty, the near-term risks for American Express Company (NYSE: AXP) are elevated and skewed to the downside, according to BofA Securities.
The American Express Analyst
Ryan Cary downgraded American Express from Buy to Neutral, reducing the price target from $145 to $108.
The American Express Thesis
During its upcoming investor call, American Express is likely to reduce its guidance due to increasing coronavirus-related travel restrictions, Cary said in the note.
Although American Express hasn't witnessed a major impact on its profitability, travel headwinds have accelerated since the beginning of March, the analyst mentioned.
Large & Global corporate spending, which has the maximum exposure to the virus impact, comprises only 9% of total billings. Cary said that smaller enterprises are reducing their travel spending, and credit and debit card data aggregated by Bank of America demonstrates consumer spending on travel has also softened.
These trends could have a “material impact on results,” Cary said. He added that despite the 29% pullback in shares, it was “too early to call the bottom.”
AXP Price Action
Shares of American Express nosedived more than 13% to $82.72 at time of publication Thursday.