On Monday, TD Cowen showed confidence in American Express (NYSE:AXP) by raising the stock's price target to $268 from the previous $260, while keeping a Hold rating on the shares. The adjustment follows the company's third-quarter earnings report, which revealed an earnings per share (EPS) of $3.49. This figure surpassed both TD Cowen's estimate of $3.19 and the consensus estimate of $3.29.
The financial performance of American Express in the third quarter demonstrated a mixed outcome, with revenue falling slightly short of market expectations. The shortfall in revenue was attributed to weaker discount revenue, which was somewhat compensated by an increase in net interest income.
The Hold rating suggests that TD Cowen believes American Express is appropriately valued at its current price, indicating that investors should maintain their positions without adding more shares or selling existing holdings. The new price target of $268 implies a potential upside from the stock's previous target but reflects caution due to the mixed financial results.
The modest increase in the price target by TD Cowen reflects a nuanced view of American Express's recent earnings performance, recognizing strengths in certain financial areas while also acknowledging the areas where the company did not meet market expectations.
Investors and market observers may view the updated price target as a signal of American Express's solid performance in terms of EPS, despite the challenges faced in revenue generation. The company's ability to exceed EPS estimates may be seen as a positive aspect in its financial management and operational efficiency.
InvestingPro Insights
American Express's recent performance aligns with several key metrics and insights from InvestingPro. The company's P/E ratio of 20.39 and adjusted P/E ratio of 20.55 for the last twelve months as of Q3 2024 reflect its current valuation, which TD Cowen seems to view as fair given their Hold rating.
InvestingPro Tips highlight that American Express is "Trading at a low P/E ratio relative to near-term earnings growth," which could explain TD Cowen's decision to raise the price target despite maintaining a Hold rating. Additionally, the company's strong financial position is underscored by the fact that it "Has maintained dividend payments for 54 consecutive years" and is "Trading near 52-week high."
The company's revenue growth of 8.94% over the last twelve months and 8.0% in Q3 2024 supports the mixed financial results mentioned in the article. While revenue slightly missed expectations, the growth remains solid. American Express's profitability is evident in its impressive gross profit margin of 55.7% and operating income margin of 20.59% for the last twelve months as of Q3 2024.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips on American Express, providing a deeper understanding of the company's financial health and market position.
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