American Express shares were cut to neutral from buy by Susquehanna analyst James Friedman, based on a full valuation at the credit card and travel services company.
His rating was at buy for at least three years, according to MarketWatch. Friedman affirmed his share-price target at $110.
"It would be hard for [the company] to do better than its merchants, so consensus 2021 revenue up 11% looks full to us," Friedman wrote in a commentary, according to MarketWatch. He said 7.5% growth is more like it, according to The Fly.
AmEx shares recently traded at $105.31, down 0.7%. They had fallen 15% year to date through Thursday. They also have risen 11% since Sept. 24, including Friday’s move.
Morningstar analyst Eric Compton sees American Express close to his fair-value estimate of $108.
“Investors should expect a difficult year for AmEx, as the company battles the coronavirus pandemic,” he wrote in a July commentary. “We expect payments volumes will decrease, revenue will decline, and credit costs will rise.”
About 30% of the company’s billings come from the travel and entertainment industry, “further exposing the company to some of the most affected industries,” Compton said.
“These trends will eventually reverse as the economy recovers, but Amex will indeed be dependent on that recovery to return to pre-Covid-19 profitability levels,” he wrote.
For the long term, “we still anticipate American Express’s greatest challenge will be adapting to the evolving landscape in payments while targeting a new generation of millennial consumers who don’t place as much importance on AmEx’s brand when selecting a credit card,” Compton said.