JPMorgan analysts upgraded shares of American Express (NYSE:AXP) to Overweight from Neutral in a note covering consumer finance stocks on Thursday, raising the price target to $205 from $167 per share.
Analysts believe that entering 2024, investors should adopt more defensive positioning in the Consumer Finance sector, as with multiples having rebounded towards historical norms, the near-term risk/reward outlook for the space is less compelling.
The 2024 performance in the sector will be driven largely by credit performance versus expectations, according to analysts.
JPMorgan believes AXP is a safe haven from deteriorating household balance sheets. "We believe low-income borrowers will face pressure from depleted pandemic savings and the lingering effects of high inflation, and expect AXP to offer investors shelter from these forces," wrote the analysts.
"Following a year end rally, price appreciation likely to follow EPS growth trajectory (10-12%) rather than multiple expansion," they concluded.