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Citi sets American Express stock target with neutral stance

EditorAhmed Abdulazez Abdulkadir
Published 06/11/2024, 12:18 AM
© Reuters.

On Monday, Citi initiated coverage on shares of American Express (NYSE: NYSE:AXP) with a Neutral rating and established a price target of $250.00 per share. The financial services company's stock is being observed for its potential as a long-term investment due to its business model and market growth, backed by a solid management team.

The rationale behind the Neutral stance is based on the current market expectations, which are considered to be high, leaving limited room for significant near-term growth. According to Citi, while American Express's earnings per share (EPS) estimates are slightly above the consensus provided by VisibleAlpha, the path to these estimates differs.

Citi's analysis suggests lower revenue projections, primarily from other fees, net interest income (NII), and discount revenue. However, this is anticipated to be balanced by reduced expenses, which could enable American Express to achieve its mid-teens EPS growth target in the near to intermediate term.

The price target of $250 reflects Citi's assessment of American Express's value, factoring in the company's financial outlook and market position. The coverage initiation by Citi provides investors with a new perspective on the company's stock, as market participants consider the balance between growth prospects and current valuation levels.

American Express, a leading global services company providing customers with access to products, insights, and experiences that enrich lives and build business success, is at the forefront of the payments industry. The company's performance and stock valuation are closely watched by investors seeking to gauge the health of the consumer financial services market.

In the broader context of the financial sector, the initiation of coverage by Citi on American Express adds to the pool of analyses available to investors, as they navigate an environment of economic changes and market dynamics.

In other recent news, American Express has been navigating a complex financial landscape, with recent developments pointing to both potential growth and emerging risks. BTIG initiated coverage on American Express stock with a Neutral rating due to potential challenges for super-prime consumers to maintain their spending levels. Despite concerns, American Express was recognized for its success in growing new accounts in both the Consumer and Commercial sectors.

Furthermore, Russian President Vladimir Putin has authorized American Express to voluntarily shut down its operations in Russia, marking another step in the reconfiguration of international business relationships due to geopolitical tensions. Meanwhile, Keefe, Bruyette & Woods have maintained their Outperform rating on American Express, indicating potential upside for the company's stock.

The Consumer Financial Protection Bureau has also released a report detailing consumer challenges with credit card rewards programs, a factor that could impact American Express given its focus on premium cards. Lastly, Warren Buffett has assured Berkshire Hathaway (NYSE:BRKa) shareholders that its major stock holdings, including American Express, will remain central to the company's portfolio under the leadership of his successor, Greg Abel.

InvestingPro Insights

As investors weigh Citi's neutral stance on American Express (NYSE: AXP), real-time data from InvestingPro offers a deeper dive into the company's financial health and market position. American Express is currently trading at a P/E ratio of 19.15, which is considered low relative to its near-term earnings growth, suggesting potential for investors looking for value opportunities. The company's robust revenue growth of 9.33% over the last twelve months as of Q1 2024, combined with a strong gross profit margin of 55.73%, reflects its operational efficiency and market strength. Additionally, American Express has demonstrated a commendable return on assets of 3.56%, underscoring its ability to generate earnings from its asset base.

InvestingPro Tips highlight American Express as a notable player in the Consumer Finance industry, with a track record of maintaining dividend payments for an impressive 54 consecutive years. This consistency in returning value to shareholders is complemented by the company's liquid assets, which exceed short-term obligations, providing financial stability. For investors seeking more insights, InvestingPro offers additional tips on American Express, which can be accessed with the exclusive coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With 6 more InvestingPro Tips available, investors can gain a comprehensive understanding of the company's potential and make informed decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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