Credit card magnate American Express (NYSE:AXP) gained nearly 3% in premarket trading after an upgrade at Goldman Sachs. That momentum continued into this morning's session as well. Goldman not only upgraded the stock's recommendation but also gave the company a new price target that's significantly above where the company closed ahead of the long holiday weekend. While Goldman Sachs is turning around, the larger financial investment community is a bit more cautious overall.
The Goldman Sachs Shift to Bullish
The upgrade from Goldman Sachs was substantial by any measure, taking American Express from “neutral” to “buy”, and also establishing a new price target of $225 per share. That's better than a third over the closing price on Friday, and suggests significant new potential ahead for American Express.
Essentially, the gains at American Express are likely to come about as the result of a reopening economy, and the accompanying increase in spending that's likely to follow, notes Goldman Sachs analyst Ryan Nash. Some of this has already started, as some states have re-opened sooner than others.
For those skeptical about Nash's projections of a revived consumer spending push, there are other points to consider for American Express. Recently, the company unveiled a slate of new benefits for its American Express Platinum card, focusing mainly on travel perks and retailer benefits.
The new perks include an annual $200 statement credit for prepaid bookings at Amex Fine Hotels when booked through American Express Travel, as well as up to $240 in annual statement credits for several different subscription services, including Amazon's (NASDAQ:AMZN) Audible and SiriusXM (NASDAQ:SIRI) satellite radio. The new perks did come with an upgraded annual fee, though—increased from $550 to $695—so it does weigh just a bit on the otherwise positive news.
Additionally, American Express has been spotted working with companies like Quicken Loans by Rocket Mortgage (NYSE:RKT) to help find new mortgages. Though American Express isn't getting any kind of revenue sharing out of the deal at last report, its presence in the market is likely enough to endear some newly-minted homeowners to its brand name. Nyca Partners partner David Sica summed it up by noting “If Amex can offer value that exceeds the membership fee of the card each year, that'll ensure the cardholder continues to transact with Amex.”
What Are Financial Analysts Saying About American Express Stock?
The American Express stock forecast, based on our latest research of the broader financial analyst community, is certainly not as bad as it could be. Right now, American Express stock is rated a consensus “hold”, which has been the case for the last two years.
A year ago, American Express had eight “buy” ratings, 11 “hold” and two “sell” to its credit. Six months ago, that pattern shifted to 10 “buy” ratings, 14 “hold” ratings, and two “sell”. Today, that's shifted once more to nine “buy”, seven “hold” and, once again, two “sell.” While the “buy” side has had comparatively minimal fluctuation, holding in that eight to 10 range for a year, the “hold” side has experienced considerably more fluctuation and has actually backed off with the latest numbers, suggesting a possibly bullish undercurrent at work.
The American Express price target, meanwhile, is fairly broad. The current consensus price target is $137.31, with a high target of $185 and a low of $95. That high—previously established by Wells Fargo back in June—is likely to be eclipsed by the new target from Goldman Sachs at $225. With American Express seen trading over $171 per share in trading today, there is some downside potential involved as the company is trading much closer to the high than the low, or even the consensus.
Recent developments for American Express have been almost completely positive. Only two negative reports have emerged this year, as DZ Bank downgraded from “buy” to “hold” back in June and Robert W. Baird downgraded from “outperform” to “neutral” in February. Aside from those two, there have been seven price target boosts and an upgrade thanks to Goldman Sachs.
Companies in This Article:
