On Tuesday, Truist Securities began coverage on American Express (NYSE:AXP) shares, assigning a Buy rating and setting a price target of $350.00. The firm's analyst cited several strengths of the financial services company, including what he described as competitive moats and long-term tailwinds.
These advantages, such as a dedicated high-end customer base and expansive international operations, are seen as outweighing recent concerns about the company's sustainable growth. According to InvestingPro data, AXP has demonstrated its market resilience with a strong financial health score and has maintained dividend payments for an impressive 55 consecutive years.
American Express, with a current market capitalization of $212.66 billion, is recognized as a major player in the integrated payments industry, holding approximately a 10% share of the total market by purchase volume. The company operates globally and is structured into four main segments.
The U.S. Consumer Services (USCS) is noted as the largest segment in terms of revenue and volume, while the International Consumer Services (ICS) is highlighted as the fastest-growing segment. InvestingPro analysis reveals the company's solid revenue growth of 8.94% and a healthy gross profit margin of 55.7%.
The analyst's positive outlook is also supported by the expectation of a rebound in spending growth, particularly in the U.S. commercial sector. Despite American Express's stock being one of the top performers in the banking landscape, with a next twelve months (NTM) price-to-earnings (P/E) ratio currently 5 turns above its long-term average, Truist Securities believes the stock has further room to grow.
The endorsement from Truist Securities comes at a time when American Express's strategic positioning and market performance are under close observation by investors. The analyst's comments reflect confidence in the company's ability to leverage its customer loyalty and global reach to continue its growth trajectory.
In other recent news, American Express has seen a mix of developments. Compass Point revised the company's price target, reducing it from $325 to $315, while maintaining a neutral stance. This change comes despite an increase in core earnings per share (EPS) estimates for 2024 through 2026. The company's third-quarter earnings surpassed expectations, with an EPS of $3.49 and revenues totaling $16.6 billion, an 8% year-over-year increase. American Express also raised its full-year EPS guidance to between $13.75 and $14.05.
In regulatory news, the Consumer Financial Protection Bureau (CFPB) has taken measures against American Express for illegal practices related to credit card rewards programs. As part of its transparency commitment, American Express disclosed its U.S. Consumer and Small Business Card Member loan delinquency and write-off statistics. As of November 30, 2024, total U.S. Consumer Card Member loans stood at $89.3 billion, with loans 30 days past due representing 1.4% of the total.
Analyst opinions on American Express have varied. TD Cowen maintained a hold rating on the company's shares, raising the price target to $268 from $260. Baird increased its price target for American Express to $240 from $215, while maintaining an underperform rating. Meanwhile, BTIG reiterated its sell rating on American Express, maintaining a $230 price target.
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