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On Monday, William Blair maintained its Outperform rating on American Express stock (NYSE:AXP), with analyst Robert Napoli highlighting the company's potential for low- to mid-teens earnings growth. Napoli adjusted the firm's earnings per share (EPS) estimates for the coming years, setting the 2025 adjusted EPS at $15.19, up from $15.10, and the 2026 adjusted EPS at $17.23, increased from $17.08. The optimistic outlook aligns with AXP's strong market performance, as InvestingPro data shows the stock has delivered an impressive 61.3% return over the past year and is currently trading near its 52-week high of $326.27.
The reaffirmation of the Outperform rating follows American Express's December-quarter results, which met expectations, and the company's 2025 earnings guidance that aligns with analysts' predictions. Napoli noted that American Express has been successful in driving revenue growth and delivering robust earnings, outpacing the overall market. The company's return of $7.9 billion to shareholders in 2024 and a 35% return on equity (ROE) were cited as evidence of its strong performance, significantly higher than its long-term average ROE of 26.5%. According to InvestingPro, AXP has maintained dividend payments for 55 consecutive years, with a recent dividend growth of 16.67%, demonstrating its commitment to shareholder returns.
American Express's valuation, trading at 21.2 times its projected 2025 EPS—representing a 5% discount to the S&P 500's estimated 22.4 times—was deemed unwarranted by Napoli. He pointed out that American Express has shown faster revenue and earnings growth than the market. The company's strategic focus on premium consumers and small and medium-sized enterprises (SMEs), along with network expansion, has led to accelerating revenue growth.
Looking ahead, American Express's guidance for 2025 anticipates 8%-10% revenue growth, with the actual outcome likely dependent on billed business growth. The December quarter saw billed business growth of 8%, and if this trend continues, management expects to reach the higher end of the revenue range. Despite concerns over moderating revenue growth, Napoli remains confident in the company's ability to achieve its aspirational targets of double-digit revenue growth and mid-teens EPS growth in a normalized economic environment. With a current market capitalization of $226.37 billion and revenue of $60.76 billion in the last twelve months, AXP continues to demonstrate its position as a prominent player in the consumer finance industry.
The analysis also touched upon the need for an acceleration in spend volume to meet revenue growth targets, considering the historical performance of billed business and the company's significant market share in fee-based consumer premium cards in the U.S.
In other recent news, American Express has seen a flurry of analyst revisions following its robust fourth-quarter 2024 performance and a positive start to 2025. Keefe, Bruyette & Woods lifted their price target to $360, reflecting the company's stronger-than-expected top-line growth and optimistic outlook on various growth sectors. However, Compass Point downgraded the target to $309 due to concerns over revenue growth, while BTIG raised its price target to $272, maintaining a Sell rating due to concerns about the company's expenses. Evercore ISI 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 also lifted its price target for the company to $326, maintaining a neutral stance.
American Express reported solid earnings for the fourth quarter of 2024 with an EPS of $3.04, slightly surpassing the consensus estimate of $3.03. The company's 9.3% revenue growth in the last twelve months reached $60.76 billion. These are recent developments in the financial analysis of American Express. Analysts from 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. Wolfe Research maintained a Peerperform rating on American Express, noting that the company's fourth-quarter EPS matched estimates and exceeded their expectations. These revisions and ratings come from recent analyst notes and reflect the ongoing financial developments within American Express.
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