American Express Surpasses Market Expectations But Faces Guidance Concerns

With a market cap of $223.1 billion, American Express Company (AXP) is a well-known global financial services firm. The company specializes in payment card products, banking, and travel services for consumers and businesses. It also offers merchant services, fraud prevention, customer loyalty programs, and operates airport lounges under the Centurion Lounge brand.

Strong Performance Over the Last Year

Shares of the credit card and payments company have outperformed the overall market during the past 52 weeks. AXP has seen a 46.2% increase, while the S&P 500 Index ($SPX) has grown by 20.7% in the same timeframe. So far in 2023, AXP shares are up 4.7%, compared to SPX’s gain of 3.2%.

Moreover, the New York-based company has outperformed the Financial Select Sector SPDR Fund’s (XLF) 31.7% return over the previous year.

Mixed Results in Recent Earnings

Despite reporting a better-than-expected Q4 earnings per share (EPS) of $3.04 and revenue of $17.2 billion, American Express stock dropped 1.4% on January 24. This decline followed disappointing guidance for 2025, as the company forecasted full-year EPS of $15 – $15.50, with a midpoint of $15.25, slightly falling short of Wall Street’s estimates. Concerns arose from rising customer engagement and marketing expenses, which pushed total costs up by 11% year-over-year. Additionally, weaker performances in key segments such as International Card Services and Global Merchant and Network Services fueled investor apprehension.

Looking ahead to the current fiscal year, which ends in December 2025, analysts predict AXP’s EPS will grow by 14.8% year-over-year to $15.33. The company has a favorable earnings surprise history, having beaten consensus estimates in the past four quarters.

Positive Analyst Ratings

Among the 29 analysts covering the stock, the consensus rating is a “Moderate Buy.” This is based on nine “Strong Buy” ratings, two “Moderate Buys,” 15 “Holds,” and three “Strong Sells.”

Price Target Adjustments

On January 27, Monness Crespi raised its price target on American Express to $355 while maintaining a “Buy” rating, highlighting a cautiously optimistic 2025 outlook.

Currently, AXP is trading below the mean price target of $316.58. The highest price target of $371 suggests a potential upside of 19.5% from current price levels.

On the date of publication, Sohini Mondal 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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