Monness Upgrades American Express (AXP:NYSE) to Buy

On Friday, April 19, 2024, Monness upgraded American Express (AXP) to Buy from a previous hold position, setting a new price target of $250, up from $245. This upgrade came on the heels of American Express’s impressive first-quarter performance in 2024, where the company not only surpassed earnings estimates but also reaffirmed its positive financial outlook for the year. The announcement by Monness Crespi, as detailed by TheFly, reflects growing confidence in American Express’s financial health and its ability to sustain growth, with the stock price at the time of the announcement standing at $228.63.

Impressive First-Quarter Performance

American Express reported a robust first-quarter performance, with earnings per share (EPS) of $3.33, which exceeded the Zacks Consensus Estimate by 12.1% and marked a significant year-over-year increase of 38.8%. This performance was underpinned by a total revenue, net of interest expense, of $15.8 billion, slightly above expectations and demonstrating a growth of 10.6% compared to the same period last year. The company’s success was largely driven by an uptick in card member spending and net interest income, alongside growth in its U.S. Consumer Services Billed business, particularly among Millennials and Gen-Z customers. However, it’s important to note that this growth came with increased expenses related to customer engagement and compensation.

Stock Price Momentum and Full-Year Earnings Forecast

The positive momentum in American Express’s stock price, which saw a 4% increase following the earnings report, can be attributed to the company’s performance exceeding top and bottom-line expectations. The full-year earnings forecast, which anticipates an EPS range of $12.67 to $13.15, surpasses Wall Street predictions and signals confidence in the company’s financial trajectory for the remainder of the year. This optimism is further bolstered by CEO Stephen J. Squeri’s remarks on the company’s success in attracting high-spending, high credit-quality customers, with new card acquisitions accelerating to 3.4 million in the quarter.

Financial Resilience and Strategic Prowess

American Express’s financial results for the first quarter of 2024 not only exceeded analyst expectations in terms of revenue and profit but also showcased a higher net interest income than anticipated, setting it apart from its peers in the finance industry. With a revenue of $15.8 billion and a net income of $2.44 billion, American Express has demonstrated its resilience and strategic prowess in navigating the financial landscape. The company’s reaffirmed full-year growth guidance, projecting a revenue growth of 9% to 11% and an EPS in the range of $12.65 to $13.15, reflects its continued confidence in its business strategy and its ability to maintain strong financial results.

Market Reception and Future Prospects

Following the announcement of its first-quarter earnings, American Express’s stock price experienced a notable increase, closing at $231.04, which represents a gain of approximately 6.23%. This movement not only highlights the stock’s positive trajectory but also places it near its 52-week high, underscoring the market’s positive reception to American Express’s financial performance and future prospects. With a market capitalization of approximately $167.24 billion and a trading volume of about 6.88 million shares on the New York Stock Exchange (NYSE), American Express continues to demonstrate its strength and appeal to investors.

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