On Tuesday, Barclays (LON:BARC) shifted its stance on American Express (NYSE:AXP), downgrading the stock from Overweight to Equalweight, while slightly raising the price target to $221 from $220. The firm indicated that the potential for further stock appreciation is limited, primarily due to valuation concerns and expectations for earnings per share (EPS) revisions.
The analyst from Barclays pointed out specific headwinds for the financial services sector, noting that Navient (NASDAQ:NAVI) Corporation (NASDAQ:NAVI) is likely to face additional challenges from increased paydowns of Federal Family Education Loan Program (FFELP) loans during the quarter. This observation was part of a broader commentary on the sector's performance and expectations.
Despite the downgrade for American Express, Barclays expressed a preference for SLM Corporation (NASDAQ:SLM), commonly known as Sallie Mae. The firm considers Sallie Mae to be the "cleanest name into the print," suggesting a more favorable outlook for the company in comparison to its peers in the financial sector.
The adjustment in American Express's rating reflects Barclays' analysis of the current market conditions and the company's financial outlook. The new price target of $221, albeit only a dollar increase from the previous target, suggests that Barclays sees some room for modest growth but does not anticipate significant gains for American Express shareholders in the near term.
American Express, as a major player in the credit card and financial services industry, is often the subject of analyst scrutiny and commentary.
InvestingPro Insights
In light of Barclays' recent repositioning on American Express (NYSE:AXP), a glance at real-time data from InvestingPro provides additional context for investors considering the stock's potential. As of the latest metrics, American Express boasts a substantial market capitalization of $161.37 billion, reflecting its significant presence in the consumer finance industry—an aspect underscored by one of the InvestingPro Tips which highlights the company as a prominent player in its sector.
The company's P/E ratio stands at 19.98, with an adjusted figure for the last twelve months as of Q4 2023 at 19.3, indicating that while the stock is trading at a high P/E ratio relative to near-term earnings growth, it remains a key figure in its industry. This aligns with Barclays' valuation concerns, as the stock is also trading near its 52-week high, with a price percentage of 52-week high at 96.73%.
InvestingPro Tips also reveal that American Express has maintained dividend payments for 54 consecutive years, suggesting a level of stability and commitment to shareholder returns. This is complemented by a dividend yield of 1.25% and notable dividend growth of 34.62% over the last twelve months as of Q4 2023.
For those considering deeper analysis or seeking further actionable insights, there are additional InvestingPro Tips available for American Express at https://www.investing.com/pro/AXP. And for a limited time, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to an extensive array of tips beyond the ones mentioned here.
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