American Express Faces Recent Challenges Despite Long-Term Growth Potential

Valued at a market cap of $211.4 billion, American Express Company (AXP) stands as a prominent player in the financial services sector. The New York-based firm provides a range of offerings, including charge and credit card products, as well as travel-related services. Its portfolio encompasses charge cards, credit cards, and various payment and financing solutions, in addition to merchant acquisition, processing services, and more.

AXP’s Market Position and Historical Context

As a “mega-cap stock,” AXP’s valuation above $200 billion highlights its significant size and influence within the credit services industry. This stature not only emphasizes the company’s market dominance but also showcases its strong brand recognition and global reach, providing AXP with a competitive edge. Since its founding in 1850, the company has earned trust and loyalty from customers around the world. Its diversified revenue streams, including both credit card services and travel offerings, bolster its financial stability and long-term growth prospects. Furthermore, with operations in over 130 countries, AXP is well-positioned to mitigate risks related to regional economic fluctuations.

Recent Stock Performance

American Express’s stock has experienced a decline of 7.8% from its 52-week high of $326.28, reached on January 23. In the last three months, the stock fell by 1.1%, lagging behind the S&P 500 Index ($SPX), which saw a slight drop during the same period.

However, over the longer term, AXP has risen 38% in the past 52 weeks, significantly outpacing the S&P 500’s 17.5% return. Year-to-date, AXP shares are up 1.8%, compared to S&P 500’s 1.2% gain.

Recent Earnings Report and Future Outlook

AXP’s recent bearish trend is confirmed by its trading activities, having remained below its 50-day moving average since mid-February, although it has sustained above its 200-day moving average over the past year. On January 24, after releasing its Q4 earnings, AXP’s stock declined by 1.4%. Even though the company exceeded expectations with a Q4 EPS of $3.04 and matched revenues of $17.2 billion, its fiscal 2025 guidance disappointed investors. Management estimates full-year earnings between $15 and $15.50 per share, which falls short of analysts’ forecasts.

On a positive note, AXP reported record-high card member spending and fee growth that led to an 8.7% year-over-year revenue increase and a 16% rise in earnings. Nevertheless, increased customer engagement and marketing costs, coupled with a significant drop in income from its International Card Services segment, contributed to investor unease.

Comparison with Rivals and Analyst Insights

Compared to its competitor, Capital One Financial Corporation (COF), which has seen a 45.7% rise over the past 52 weeks and a 12.7% gain year-to-date, AXP’s performance has lagged. Despite this slight underperformance relative to the S&P 500, analysts maintain a cautiously optimistic outlook for AXP. The stock currently holds a consensus rating of “Moderate Buy” from 29 analysts, with a mean price target of $322.69, reflecting a modest 7.2% upside from its current levels.

On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.