The firm lowered its price target to $67 from $81 on the stock.
In light of American Express's split from Costco earlier this year, American Express will lose 8.1% of its cardholders, 8% of its network volume and 18% of its loan portfolio after March 2016, according to UBS, Barron's reports. The firm had previously forecast a 2.5% loss of cardholders, 4.5% loss of network volume and 12% loss of loan portfolio.
UBS no longer expects positive earnings growth during fiscal 2016, and does not expect the company to reach its long-term earnings growth target during the next several years, according to Barron's.
"We believe a significant transformation is needed for the company to adapt to the evolving nature of the payment industry and its own closed-loop model, a transformation that could last several years," UBS analysts said in a note, Barron's adds.
Separately, TheStreet Ratings team rates AMERICAN EXPRESS CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate AMERICAN EXPRESS CO (AXP) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.2%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Consumer Finance industry average. The net income has decreased by 14.3% when compared to the same quarter one year ago, dropping from $1,477.00 million to $1,266.00 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.
- AMERICAN EXPRESS CO's earnings per share declined by 11.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AMERICAN EXPRESS CO increased its bottom line by earning $5.55 versus $4.88 in the prior year. For the next year, the market is expecting a contraction of 4.7% in earnings ($5.29 versus $5.55).
- You can view the full analysis from the report here: AXP