Banking, finance, and taxes

Despite Share Gains, Why Analysts Keep Lowering Amex Targets and Estimates

Jon C. Ogg

Published: April 27, 2020 2:01 pm

Earnings season has been mixed for financial companies, but the pure-play banks with investment banking, investment management and other loan and interest exposure saw their shares sell off. It turns out that American Express Co. (NYSE: AXP) came through its earnings report, and its shares were up both on Friday and again on Monday.

The independent credit card issuer said it had $1.98 in earnings per share (EPS) and $10.31 billion in revenue, while consensus estimates were $1.43 in EPS and $10.65 billion in revenue. The same period of last year reportedly had EPS of $2.01 on $10.49 billion in revenue. American Express noted that weakness reflected softness in spending volumes beginning in the past few days of February that significantly accelerated in March as a result of COVID-19 impacts.

Wall Street analysts are continuing to lower expectations. Amex disclosed that loss provisions of $2.6 billion were up $809 million from a year ago. The increase was driven primarily by significant reserve builds of $1.7 billion, which reflect deterioration of the global estimated macroeconomic outlook due to COVID-19 impacts.

BofA Securities maintained its Neutral rating and its $104 price objective after earnings. The firm also handily brought down earnings estimates to $4.46 EPS (from $5.79 EPS) for 2020 and $6.77 EPS (from $6.48) for 2021.

CFRA maintained its Hold rating with a target price of $96, but the firm lowered its 2020 EPS estimate to $6.05 from $7.68 and its 2021 EPS expectations to $7.80 from $8.46.

Oppenheimer started Amex with an Outperform rating and a $100 price target.

Other analyst ratings were soon on American Express as well:

• BMO Capital Markets maintained it as Market Perform but lowered its target price to $95 from $115
• Compass Point slashed its target price to $78 from $140.
• Credit Suisse maintained its Underperform rating and lowered its target to $85 from $90.
• Deutsche Bank maintained its Buy rating but lowered its target from $112 to $108.
• Piper Sandler lowered its target price to $106 from $119.
• Susquehanna maintained it as Buy but lowered its target from $135 to $120.

American Express stock traded up 0.5% at $83.68 on Monday, in a 52-week range of $67.00 to $138.13. Its consensus analyst price target from Refinitiv was $104.52, down from $106.87 a day ahead of the earnings report.