Goldman Sachs Analyst Optimistic on American Express with Enhanced Price Target Amid Mixed Q2 Results

Goldman Sachs analyst Ryan M. Nash has provided an optimistic outlook for American Express Co. (AXP), maintaining a “Buy” rating while increasing the price target from $263 to $270. This follows American Express’s second-quarter fiscal 2024 results, which showed mixed performance. Although the company surpassed earnings per share (EPS) expectations, largely due to a lower provision, its Pre-provision Net Revenue remained consistent with prior estimates. Analysts have noted that while there is some softness in top-line growth, the credit performance is stronger than anticipated, easing concerns about future revenues.

In light of these results, Nash pointed out that American Express is expecting a slowdown in Net Interest Income (NII) and similar trends in billed business growth. Despite this potential deceleration in revenue streams for the second half of the year, Nash remains positive about American Express’s overall prospects. He emphasized that card fees are likely to start growing again and indicated improvements within small businesses, factors that could help counterbalance the decreased growth in NII.

The company plans to invest $6 billion in marketing in 2024, which Nash believes will position American Express well for revenue growth heading into 2025. Furthermore, he expects that the current credit performance, thought to remain steady with moderated losses, could reassure investors about the potential for mid-teens EPS growth in the years ahead. Nash has updated his EPS forecasts for fiscal 2024, 2025, and 2026, predicting growth from previous estimates. Meanwhile, RBC Capital Markets analyst Jon Arfstrom also noted a strong second quarter for American Express, reaffirming his “Outperform” rating and raising the price target slightly. Both analysts underscore the company’s robust business model and its ability to navigate a slower revenue environment.