American Express (AXP) Posts Solid Growth Ex-Costco - Bernstein

Bernstein analyst, Kevin St. Pierre is gaining confidence in American Express's (NYSE: AXP) outlook and reiterated his Buy rating and $77 PT.

AXP reported 1Q EPS of $1.45, or $1.50 excluding $0.05 per share in restructuring charges. The results beat consensus of $1.35. Revenues were a little lighter than expected and the beat was driven largely by lower expenses. Management still expects 2016 EPS to be between $5.40 and $5.70 and 2017 EPS to be at least $5.60.

Total billed business was up 3% YoY (6% FX adjusted), with 4% growth in the US and 2% growth internationally. Excluding both FX effects and Costco, the firm estimates total billed business increased 8% YoY.

Net interest income rose 9% YoY to $1.6 billion and was modestly below our expectation. Excluding the Costco and JetBlue portfolios and adjusting for FX, card member loans grew roughly 11% YoY.

AXP closed the sale of the $1.1 billion JetBlue portfolio in 1Q and plans to complete the sale of the $14 billion Costco portfolio in 2Q. AXP previously indicated it expects to record a gain of approximately $1 billion from the sale of the Costco portfolio.

The analyst thinks 12+% EPS growth will be achievable beyond 2017 as they get back to turning the "6-4-3": 6% revenue growth, 4% expense growth (or less), and 3% share repurchases (or more).

For an analyst ratings summary and ratings history on American Express click here. For more ratings news on American Express click here.

Shares of American Express closed at $65.02 yesterday.

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