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American Express cut at Morgan Stanley as revenue growth now a 'show me' story

Published 2024-02-08, 11:52 a/m
© Reuters.

American Express (NYSE:AXP) was cut to Equal-Weight from Overweight at Morgan Stanley on Thursday, with analysts stating that the good news is now mostly priced in.

Furthermore, analysts believe that American Express' discount revenue acceleration is now a "show me" story.

AXP needs to show it can indeed reaccelerate growth in its single-largest business line, discount revenues, which was 55% of 2023 revenues, explained the analysts.

"Discount revenues have slowed through all of 2023, exiting the year at just +5% y/y," they said. "The upper end of management's 9-11% revenue growth could be aspirational; we leave our revenue growth forecast towards lower end, at 9.5%."

"Credit remains best-in-class among card peers, but normalization of prime quality borrowers could act as a headwind to EPS this year," the analysts added. "With most of the good news now, namely with the stock trading at a modest premium to its historical average (current forward PE of 16x), we step to the sidelines."

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