Barclays Maintains an 'Overweight' on American Express (AXP); Spend Growth Solid Again

Barclays maintains an 'Overweight' on American Express (NYSE: AXP) price target of $60.00.

Barclays analyst says, "AXP reported July managed credit data that showed flat delinquencies at 1.5% and slightly higher NCOs at 2.8% (+10 bps m/m). Trust delinquencies and NCOs declined 3 bps to 1.62% and 6 bps to 2.87% respectively. We'd typically expect delinquencies to increase 1-4 bps in July based on seasonal trends, so AXP's July credit looks only slightly better than seasonal forces, as credit trends appear to have essentially stabilized. Nonetheless, with delinquencies and NCOs stabilizing at levels well below what we would consider to be "normalized" we expect the tailwind from reserve releases to continue, albeit at a slower pace. Last quarter, U.S. card NCOs were 3.07%, so 3Q appears to be trending 30-40 bps better than that level. Plus, with reserves/loans of 4.36% at the end of 2Q, AXP is still likely significantly over-reserved based on our NCO expectations over the next 12 months, assuming credit remains relatively stable."

For more ratings news on American Express click here and for the rating history of American Express click here.

Shares of American Express closed at $45.82 yesterday.

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