Barclays on U.S. Consumer Finance: 2Q11 Card Preview (AXP, COF, MA and V)
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Up: 8 | Down: 5 | New: 26
Rating Summary:
28 Buy, 14 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on U.S. Consumer Finance: 2Q11 Card Preview (AXP, COF, MA and V)
Barclays analyst, Bruce W. Harting, said, "When the card networks and issuers we cover report calendar 2Q11 earnings over the next few weeks, we expect results to reflect improving credit trends, stable to growing loan balances, and solid spend growth. The latest intra-quarter data points show continued declines in card delinquencies and NCOs, while spend growth also remains healthy despite more challenging comparisons. Over the past few months, credit trends once again came in better than normal seasonal trends would dictate, so sizable reserve releases could be in order. We believe the market has not rewarded our stocks for reserve releases, but with the return to normalized earnings for issuers likely to occur within the next year, we believe the stocks could continue to rally as investors realize the shares are still cheap on normalized EPS, which we estimate at $6.50 for Capital One (NYSE: COF) and $4.50+ for American Express (NYSE: AXP). For Visa (NYSE: V) and MasterCard (NYSE: MA), we also expect solid performance as the Durbin overhang is removed, and fundamentals should be
buoyed by strong secular growth trends."
Barclays raises its price target on AXP from $55 to $60 and raises FY11 EPS estimates from $3.90 to $3.95 and FY12 from $4.35 to 4.40.
Barclays raises FY11 EPS estimates on COF from $7.10 to $7.40.
Barclays analyst, Bruce W. Harting, said, "When the card networks and issuers we cover report calendar 2Q11 earnings over the next few weeks, we expect results to reflect improving credit trends, stable to growing loan balances, and solid spend growth. The latest intra-quarter data points show continued declines in card delinquencies and NCOs, while spend growth also remains healthy despite more challenging comparisons. Over the past few months, credit trends once again came in better than normal seasonal trends would dictate, so sizable reserve releases could be in order. We believe the market has not rewarded our stocks for reserve releases, but with the return to normalized earnings for issuers likely to occur within the next year, we believe the stocks could continue to rally as investors realize the shares are still cheap on normalized EPS, which we estimate at $6.50 for Capital One (NYSE: COF) and $4.50+ for American Express (NYSE: AXP). For Visa (NYSE: V) and MasterCard (NYSE: MA), we also expect solid performance as the Durbin overhang is removed, and fundamentals should be
buoyed by strong secular growth trends."
Barclays raises its price target on AXP from $55 to $60 and raises FY11 EPS estimates from $3.90 to $3.95 and FY12 from $4.35 to 4.40.
Barclays raises FY11 EPS estimates on COF from $7.10 to $7.40.
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