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American Express stock target raised on solid Q1 results

EditorNatashya Angelica
Published 2024-04-22, 12:46 p/m
© Reuters.

On Monday, RBC (TSX:RY) Capital Markets adjusted its outlook on American Express (NYSE:AXP) shares, raising the price target to $253 from the previous $250 while maintaining an Outperform stock rating. The revision follows the company's first-quarter earnings report, which aligned with revenue expectations and demonstrated well-managed core expenses and acceptable credit trends.

American Express, listed on the NYSE:AXP, had a robust quarter according to RBC Capital's assessment. The financial services company's revenue met forecasts, and it managed to keep a tight rein on core expenses. Although there has been a noted moderation in spending volumes, the management's confidence in both the near and longer-term revenue trajectory has not wavered.

The firm's analysis highlighted that American Express's reaffirmed outlook for 2024 bolsters the case for mid-teens earnings per share (EPS) growth. This level of growth is viewed as attainable and sustainable, even if the revenue growth pace slows down. This perspective supports the rationale behind the increased price target.

RBC Capital's commentary included a recap of the first-quarter results, emphasizing the company's solid performance. "This was a good quarter with revenues that met expectations, controlled core expenses, and acceptable credit trends," the firm noted. The commentary further acknowledged the moderation in spending volumes but underscored management's optimism about revenue prospects.

In conclusion, RBC Capital has adjusted its estimates for American Express in light of the first-quarter performance and the company's outlook. The new stock price target of $253 up from $250 reflects the firm's confidence in American Express's ability to achieve and maintain a strong growth trajectory in earnings, despite potential challenges in the revenue environment.

InvestingPro Insights

As American Express (NYSE:AXP) garners a positive outlook from RBC Capital Markets, insights from InvestingPro further enrich the narrative around the company's financial standing. With a market capitalization of $166.19 billion and a P/E ratio that suggests value relative to near-term earnings growth at 18.22, American Express is poised as a prominent player in the Consumer Finance industry.

The company's revenue growth over the last twelve months as of Q1 2024 stands at a healthy 9.33%, supporting the optimism in its revenue trajectory.

InvestingPro Tips highlight that American Express is trading near its 52-week high, reflecting a significant price uptick over the last six months with a total return of 64.23%. This momentum is further substantiated by a strong three-month price total return of 25.27%.

Moreover, American Express has demonstrated a commitment to shareholder returns, maintaining dividend payments for an impressive 54 consecutive years, with a recent dividend growth of 16.67%.

For readers interested in a deeper dive into American Express's performance and prospects, InvestingPro offers additional tips and metrics. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This includes access to more than 6 additional InvestingPro Tips, which can provide a more comprehensive understanding of the company's financial health and investment potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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