Hedge funds cut NFLX, keep big bets on MSFT, AMZN, add NVDA
On Monday, Compass Point analyst revised the price target for American Express (NYSE:AXP) shares, reducing it to $309 from the previous $325, while maintaining a Neutral stance on the company's stock. The adjustment comes amid concerns over revenue growth and a potential shift in revenue mix that could lead to multiple contraction. Currently trading at $321.34 and near its 52-week high of $326.27, InvestingPro analysis suggests the stock is slightly overvalued based on its proprietary Fair Value model.
The firm's analysis suggests that American Express may face challenges in achieving the 10% revenue growth rate that management aspires to, which is deemed critical given the stock's current trading at a premium compared to its five-year average. While the company achieved 9.3% revenue growth in the last twelve months, reaching $60.76 billion, Compass Point's revenue growth projections for 2025 and 2026 are slightly below the consensus at 8.9% and 8.4% year-over-year, respectively, compared to the consensus of 9.0% for both years. InvestingPro data reveals strong financial health metrics, with 13 additional ProTips available to subscribers.
Moreover, Compass Point forecasts a $700 million and $1.48 billion shortfall in non-interest income for 2025 and 2026, respectively, while net interest income expectations are $641 million and $960 million higher for the same periods. The analyst noted potential headwinds from a discount rate due to faster growth in international volumes versus domestic and long-term trends excluding the temporary COVID-19 surge.
The consensus also appears to overestimate net proprietary card acquisitions, expecting over 4 million year-over-year per quarter in 2025, along with a rise in service fees and other revenue per card without a corresponding increase in marketing expenses.
The report highlights the investment community's intense focus on American Express's ability to sustain a 10% revenue growth rate, which is considered unlikely to be the business's sustainable growth rate. Despite the company's ability to reach this target in a robust billings environment, the analyst suggests that the current high valuation and consensus expectations for 2026 do not justify a more optimistic outlook.
In the context of these projections, American Express reported its fourth-quarter earnings for 2024, with an EPS of $3.04, narrowly beating the consensus estimate of $3.03. The company's solid performance is reflected in its trailing twelve-month diluted EPS of $14.01 and impressive return on equity of 34%. For comprehensive analysis including valuation models and growth projections, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, American Express has seen several updates from analysts. BTIG has raised its price target for American Express to $272, maintaining a Sell rating, citing concerns about the company's expenses and revenue growth guidance for 2025. Evercore ISI, on the other hand, has increased the company's stock target to $344, citing higher sector multiples and positive revisions to earnings per share (EPS) for 2025 and 2026.
Bank of America Securities has lifted its price target for American Express to $326, maintaining a neutral stance. The bank highlighted that the company's fourth-quarter earnings met expectations, with EPS slightly missing due to higher operating expenses. Wolfe Research maintained a Peerperform rating on American Express, noting that the company's fourth-quarter EPS matched estimates and exceeded their expectations.
Goldman Sachs reaffirmed a Buy rating on American Express shares with a steady price target of $350, despite pre-tax pre-provision net revenue falling short of expectations due to higher expenses. The company's total billed business grew by 6.8% year-over-year, outpacing consensus estimates. These are recent developments in the financial analysis of American Express.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.