Barclays Reiterates an 'Overweight' on American Express (AXP); Earnings Beat Plays like a Broken Record
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Price: $331.15 -2.57%
Rating Summary:
23 Buy, 23 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
23 Buy, 23 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Barclays reiterates an 'Overweight' on American Express (NYSE: AXP) price target of $60.00.
Barclays analyst says, "Beat Leaves Expense Questions Unanswered, but We Like the Growth and Valuation: Similar to prior quarters, AXP's 3Q11 EPS of $1.03 exceeded expectations (both our $1.01 estimate and consensus of $0.96) on robust spend trends and reserves releases, though with only part of the upside falling to the bottom line as AXP "reinvested" the benefits. Results benefitted from a $400MM reserve release, a tax benefit related to a distribution of foreign subsidiary earnings, and Visa (NYSE: V) settlement payments, which collectively were mostly reinvested back into the business. Despite the strong top-line trends, we expect AXP could tread water until it demonstrates that it can dial back expenses as these benefits fade over the�next few quarters. We believe AXP will be able to reign in expenses in the coming quarters, which should support 2012 EPS of $4.45. Once AXP proves it can control expenses, as one of the few financials generating strong revenue growth, we expect the multiple will re-rate higher. With the shares trading at less than 10.5x our 2012 estimate compared to an average historic multiple closer to 16x, we see considerable upside."
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 $46.13 yesterday.
Barclays analyst says, "Beat Leaves Expense Questions Unanswered, but We Like the Growth and Valuation: Similar to prior quarters, AXP's 3Q11 EPS of $1.03 exceeded expectations (both our $1.01 estimate and consensus of $0.96) on robust spend trends and reserves releases, though with only part of the upside falling to the bottom line as AXP "reinvested" the benefits. Results benefitted from a $400MM reserve release, a tax benefit related to a distribution of foreign subsidiary earnings, and Visa (NYSE: V) settlement payments, which collectively were mostly reinvested back into the business. Despite the strong top-line trends, we expect AXP could tread water until it demonstrates that it can dial back expenses as these benefits fade over the�next few quarters. We believe AXP will be able to reign in expenses in the coming quarters, which should support 2012 EPS of $4.45. Once AXP proves it can control expenses, as one of the few financials generating strong revenue growth, we expect the multiple will re-rate higher. With the shares trading at less than 10.5x our 2012 estimate compared to an average historic multiple closer to 16x, we see considerable upside."
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 $46.13 yesterday.
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