NEW YORK (TheStreet) -- UBS initiated research on American Express (AXP - Get Report) on Tuesday, giving the lender a "neutral" rating and $94 price target. The investment bank said despite its blue chip status in the credit and charge business, there is potential headwinds in changing net interest margins.
TheStreet Ratings team reiterates AMERICAN EXPRESS CO as a Buy with a ratings score of A-. The team has this to say about their recommendation:
"We rate AMERICAN EXPRESS CO (AXP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AXP's revenue growth has slightly outpaced the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 47.49% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- AMERICAN EXPRESS CO has improved earnings per share by 14.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AMERICAN EXPRESS CO reported lower earnings of $3.87 versus $4.08 in the prior year. This year, the market expects an improvement in earnings ($4.92 versus $3.87).
- The net income growth from the same quarter one year ago has exceeded that of the Consumer Finance industry average, but is less than that of the S&P 500. The net income increased by 9.3% when compared to the same quarter one year prior, going from $1,250.00 million to $1,366.00 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Consumer Finance industry and the overall market, AMERICAN EXPRESS CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- You can view the full analysis from the report here: AXP Ratings Report