Shares of American Express Company (NYSE: AXP) are up more than 5.0% on Friday after a Baird analyst turned bullish on the credit card company.
American Express has a 20% upside from here
David George raised his rating on AXP this morning to “outperform” with a price target of $175 that represents a 20% upside from here. The analyst acknowledged the macroeconomic uncertainty but said:
Yes, credit quality will eventually normalize, and deposit betas will increase. In our view, however, these fears are more than priced into the stock as it trades at 15%-20% discount on preprovision net revenue, price/earnings, and cap/assets.
The American multinational reported its financial results for the first quarter in April that topped Wall Street expectations.
Gina Sanchez agrees with the bullish outlook
The CEO of Chantico Global also agrees that American Express Company is a buy at the current, cut down valuation. This afternoon on CNBC’s “The Exchange”, Gina Sanchez said:
Credit cards benefit from rising interest rates. And you need some interest rate protection in your portfolio. AXP checks all boxes; it’s got great margins and balance sheet. We’re banking on the fact that what they lose on consumption, they’ll gain on interest rate play.
Earlier this week, the U.S. central bank raised rates by 75 bps to tame inflation that hit a new forty-year high of 8.6% in May. Sanchez is bullish on all of the major credit card companies, but American Express, in particular, she says, is “better priced”.
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