On Friday, Barclays (LON:BARC) reiterated its Equalweight rating on American Express (NYSE:AXP) with a steady price target of $221.00. The firm highlighted the potential for the company to achieve 10% revenue growth in the fiscal year 2024, emphasizing that such an increase is likely to depend on a significant contribution from Net Interest Income (NII). The assessment also noted that while American Express's current valuation reflects its robust growth prospects, its focus on lending might restrict any further expansion of its price-to-earnings ratio.
Barclays pointed out that American Express has several ways to reach the forecasted revenue growth. The firm's analysis suggests that for American Express to meet the revenue targets, there would need to be a heightened emphasis on NII, which is the difference between the revenue generated from a bank's assets and the expenses associated with paying out its liabilities.
The firm's commentary acknowledged the current market valuation of American Express, indicating that the growth potential has been factored into the stock's present price. However, it was also mentioned that as American Express leans more into the lending space, this strategic move could serve as a limiting factor for the stock's potential price-to-earnings multiple growth.
The Equalweight rating indicates that Barclays views American Express shares as fairly valued at the current levels, suggesting that the stock is expected to perform in line with the broader equity market or its sector peers.
The price target of $221.00 remains unchanged, serving as an indicator of where Barclays believes the stock will trade in the near future. This target is based on the firm's analysis of the company's earnings potential and other relevant market factors.
In other recent news, American Express has been navigating a complex financial landscape. Wells Fargo (NYSE:WFC) has maintained its Overweight rating on American Express, citing the stock's current valuation as an opportunity for investors. The financial services firm suggests American Express shares are trading at an attractive multiple—15 times the firm's estimated earnings per share (EPS) for 2025 and 13 times the projected EPS for 2026. Citi initiated coverage on American Express with a Neutral rating, setting a price target of $250.00 per share, suggesting lower revenue projections offset by reduced expenses. BTIG also initiated coverage on the company with a Neutral rating, voicing potential challenges for consumer spending levels.
However, American Express was recognized for its successful growth of new accounts in both Consumer and Commercial sectors. Russian President Vladimir Putin authorized American Express to voluntarily shut down its operations in Russia, marking a shift in international business relationships due to geopolitical tensions. Meanwhile, Keefe, Bruyette & Woods maintained their Outperform rating on American Express, indicating potential upside for the company's stock. These are recent developments in the financial sector concerning American Express.
InvestingPro Insights
As American Express (NYSE:AXP) navigates through its strategies to stimulate revenue growth, particularly through Net Interest Income (NII), it's illuminating to look at the company's performance through the lens of current financial metrics. With a solid market capitalization of $161.58 billion, American Express is trading at a Price/Earnings (P/E) ratio of 18.41, which adjusts to a slightly more attractive 17.81 when considering the last twelve months as of Q1 2024. This P/E ratio positions the company attractively relative to its near-term earnings growth.
An InvestingPro Tip highlights that American Express is trading at a low P/E ratio relative to its near-term earnings growth, which may appeal to value-oriented investors. Additionally, the company's PEG ratio of 0.65 for the same period suggests that the stock may be undervalized when factoring in its earnings growth rate. With a revenue growth of 9.33% in the last twelve months as of Q1 2024, American Express is on a trajectory that aligns with Barclays' expectations for the fiscal year.
For investors looking to delve deeper into the financial health and future prospects of American Express, there are additional InvestingPro Tips available. These tips include insights on the company's status as a prominent player in the Consumer Finance industry and its impressive track record of maintaining dividend payments for 54 consecutive years. To explore these insights further, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, which offers an extensive list of 8 additional tips for American Express.
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