Banking, finance, and taxes

How Will American Express Earnings Stand Up to COVID-19?

Chris Lange

Published: April 23, 2020 11:51 am

American Express Co. (NYSE: AXP) is scheduled to release its first-quarter earnings report before the opening bell on Friday. The consensus estimates call for $1.48 in earnings per share (EPS) and $10.71 billion in revenue. In the same period of last year, Amex said it had $2.01 in EPS and $10.49 billion in revenue.

While consumer spending may drop as a result of this COVID-19 outbreak, the need for credit cards for almost all transactions will not. This puts Amex in an almost unique position, along with Visa and Mastercard. Products like Apple Pay have had some traction, but the “Big Three” payments companies still control the market. If consumers are forced to avoid retail locations somewhat, a huge amount of spending will move online, where American Express is a staple for payment.

During the fourth quarter, consolidated total revenues net of interest expense totaled $11.4 billion, up 9% from $10.5 billion the prior year. This growth continued to be driven by a well-balanced mix of growth in fee, spend and lend revenues, consistent with the high levels of revenue growth the company had delivered for over two years.

At the same time, consolidated provisions for losses were $1 billion, up 7% from $954 million a year ago.

Excluding Thursday’s move, American Express stock had underperformed the S&P 500 and Dow Jones industrial average, with its share price down about 34% year to date. In the past 52 weeks, the stock was down closer to 27.5%.

Here’s what a few analysts had to say ahead of the report:

• Morgan Stanley has an Overweight rating and a $117 price target.
• Deutsche Bank has a Buy rating with a $112 target price.
• Wells Fargo has an Overweight rating and a $107 price target.
• CFRA has a Hold rating with a $96 target price.
• JPMorgan has a Neutral rating with a $93 price target.

American Express stock traded up over 1% on Thursday to $83.74, in a 52-week range of $67.00 to $138.13. The consensus price target is $106.87.