Banking, finance, and taxes

Why Amex Could Be Poised for a Strong Q1

Chris Lange

Published: April 18, 2018 12:25 pm

Last Updated: January 12, 2020 12:49 am

American Express Co. (NYSE: AXP) is scheduled to release its most recent quarterly results after the markets close on Wednesday. The consensus estimates from Thomson Reuters are $1.71 in earnings per share (EPS) on $9.05 billion in revenue. The same period of last year reportedly had EPS of $1.34 and $7.89 billion in revenue.

In its most recent earnings report, Amex posted gains across all of its segments, with the exception of Corporate, but this wasn’t enough for investors. Guidance even looked solid for the coming year as well. So what held back the stock?

Amex took on a sizable charge related to the tax reform law back in January. The firm had a $2.6 billion charge that represented the estimate of taxes on deemed repatriations of certain overseas earnings and the remeasurement of U.S. deferred tax assets and liabilities.

We shouldn’t expect another big tax charge this quarter, and that’s one reason to be optimistic. However, there are plenty of other factors that could bring shares down. The stock could really go anywhere from here.

This stock has bounced back from its big slump in February. Although it is not back up to its January numbers, analysts seem optimistic for now.

Excluding Wednesday’s move, Amex had outperformed the broad markets over the past 52 weeks with its stock up about 22%. In just 2018 alone, the stock was down over 5%.

A few analysts weighed in on Amex ahead of the report:

• Oppenheimer has a Buy rating with a $110 price target.
• Citigroup has a Buy rating and a $110 price target.
• UBS has a Buy rating with a $111 target price.
• William Blair has an Outperform rating.
• Credit Suisse has a Hold rating with a $94 target.
• Stephens has a Hold rating.

Shares of Amex were last seen up 1% at $94.93, with a consensus analyst price target of $107.07 and a 52-week range of $75.51 to $102.39.