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Investing.com - William Blair has reiterated an Outperform rating on American Express (NYSE:AXP), highlighting the company’s success with younger consumers as a key growth driver. The financial services giant, currently trading near its 52-week high at $322.53, maintains a "GREAT" financial health score according to InvestingPro analysis.
The investment firm noted that Gen-Z and millennial customers show stronger engagement and provide American Express with a higher share of wallet compared to older demographics. These younger cohorts also come with lower servicing costs, though they exhibit slightly higher delinquency rates at 2.1% versus 1.3% for Gen-X and baby boomers. This strategy appears to be working, with the company posting robust revenue growth of 9.05% over the last twelve months.
William Blair expects the long-term return on investment from younger cardholders will eventually surpass that of older groups, as younger customers tend to keep American Express cards more "top-of-wallet," driving higher relative spending with comparable credit performance.
The firm pointed to American Express’s successful 2021 Platinum card refresh as evidence of effective product strategy. Despite raising the annual fee by 26% to $695, American Express grew accounts by 60% through 2023, while spend per new account increased 18%, profit per account rose 28%, and billed business retention reached 99%.
William Blair also expressed interest in American Express’s small and medium enterprise business amid recent corporate activity in the financial technology sector, including Ramp’s $16 billion valuation and Melio’s acquisition at $2.5 billion, suggesting the company’s competitive position remains solid.
In other recent news, American Express has been active with several significant developments. The company announced that the Federal Reserve has set its preliminary Stress Capital Buffer requirement at the minimum 2.5%, effective from October 2025 through September 2026. This requirement is consistent with American Express’ previous disclosures and highlights the company’s strong capital position. Additionally, American Express plans to refresh its Platinum Cards, marking its largest investment in a card update, with details to be revealed in fall 2025. Keefe, Bruyette & Woods maintained an Outperform rating on American Express following this announcement, suggesting potential growth in card fee income.
In another update, American Express disclosed its loan portfolio statistics for U.S. Consumer and Small Business Card Member loans, with delinquency and write-off rates providing insights into credit performance. The company also issued €1 billion in notes due 2032, further solidifying its financial strategies. These developments reflect American Express’ ongoing efforts to enhance its offerings and maintain financial stability.
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