American Express Co. (NYSE: AXP) is one of the premier financial stocks when it comes to credit cards. After all, it is generally considered to have more strict credit standards than many of the bank-issued credit cards that clear through Visa or Mastercard. Amex also charges an annual fee for its tiered cards that is generally higher than the rival cards.

The COVID-19 pandemic has hurt all financial companies, but the team at BofA Securities is now much more worried than it has been about Amex’s prospects in the months ahead. Analyst Mihir Bhatia downgraded American Express to Underperform, after already having an unambitious Neutral rating on the card issuer. The price objective also was chopped to $95 from $106 in this call.

Note that this equivalent of a Sell rating at other firms, and it calls for more than a 2% drop in Amex’s stock price from the prior close of $98.48. This is also now handily under the Refinitiv consensus analyst price target of $104.76.

The main issue appears to be that Amex is so dependent on travel spending, particularly airlines and lodging. Bhatia put that at 16% of 2019 billings alone. While BofA’s report specified that the firm was impressed by management’s execution and by its resilience during COVID-19 crisis, the biggest concern now is Amex’s near-term to medium-term billing volumes. BofA’s own Proprietary Global Travel Survey and outside industry commentary has Bhatia worried that travel spending is likely to take some time to fully recover.

With Amex being “over-indexed to travel,” a prolonged spending lull in travel is expected to lower investor sentiment for the card-issuer’s stock. Bhatia sees a more favorable risk/reward in consumer finance for the more credit-oriented issuers like Synchrony Financial (NYSE: SYF) and Discover Financial Services (NYSE: DFS). The BofA ratings are Buy for Synchrony and Neutral for Discover. These two stock valuations are currently trading at high-single-digit price-to-earnings multiples, versus closer to 15 for American Express, and both Discover and Synchrony offer higher near-term earnings per share growth.

While an Underperform rating based on near-term to medium-term billing issues may sound like it could just be a couple of quarters, the BofA team now suggests that it could be 2024 before spending volumes on airlines and lodging return to 2019 levels. A full recovery is also said to be dependent on a coronavirus vaccine being available and being widely administered. The firm’s own travel survey now shows that more than a third of consumers are waiting for a vaccine before they are willing to travel internationally. The survey also showed that a significant portion of would-be travelers are concerned about getting on an airplane and staying in a hotel.

BofA also lowered Amex’s 2020 and 2021 earnings estimates based on this slower travel spending recovery. The 2020 estimate was lowered to $3.59 per share from $3.67, and the 2021 estimate was lowered to $6.75 from $7.04. Bhatia also compressed the acceptable earnings multiple down to 14 from 15 in the call due to the implied sentiment damage.

BofA does point out that there are risks to this call to dump the stock. The analyst sees management as best-in-class and the company could outperform expectations in the third quarter. Bhatia also pointed out that Amex has been managing the challenging backdrop admirably.

American Express stock traded down 2.3% at $96.12 on Wednesday. Amex also lags its rivals with a 1.75% dividend yield that is only about 26% of next year’s earnings expectations and about 21% of last year’s adjusted earnings per share.

Synchrony Financial’s stock traded by 0.1% at $25.65, but that is still down from a 52-week high of $38.18. Its dividend yield is 3.4%.

Discover stock was down 0.4% at $54.30, and its 52-week high is $87.43. It has a dividend yield of about 3.2%.

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