Standard & Poor’s Equity Research raised its rating on American Express (AXP) today to a Buy and $65.00 target. Normally this wouldn’t matter except that S&P tends to be deemed more objective than others in the Buy-Sell-Hold crowd, and they evaluate balance sheets and business trends differently than Wall Street.
S&P raised its rating to 4 STARS (BUY) from 3 STARS (HOLD) as it believes the recent decline in share price reflects investors’ concern about the health of consumer credit. S&P thinks that American Express cardmembers typically enjoy a better credit profile than those of its competitors and thinks that its rewards programs will providing added incentive for consumers to pay off their balance ahead of competing cards. S&P expects a solid employment environment and resilient consumer spending to help support transaction volume.
S&P is maintaining its 12-month target price of $65.00, 19 times its 2007 EPS estimate of $3.43 and at a premium to peers.
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