American Express outlook remains favorable despite some risks

Published By: Eunice Gettys on January 10, 2017 12:19 pm EST

American Express Company (NYSE:AXP) has been upgraded by Oppenheimer, a financial research firm, which believes that the near term prospects of the stock are quite bright. Analyst Ben Chittenden commented that American Express still has certain risks associated with it but the balance is now tilted in the favor of the company. He believes that the Republican reign will prove to be very helpful for American financial organizations and most of the stocks in the segment will see some major upside in the coming days.

Following the conclusion of Presidential Elections in the United States, almost all the stocks in the financial sector rose significantly. American Express Company, however, lagged behind and gained 13.6% since the conclusion of elections as compared to XLF, which is up 17.3% since. The analyst believes that this is likely because of the heightened level of risk associated with American Express as compared to other stocks in the segment but the investors need to note that most of the headwinds are already factored in the stocks trading price.

The analyst added that despite there being significant headwinds, the investors should look at the catalysts that will drive the stock higher. The analyst believes that the consumer spending via Travel and Entertainment cards will rise significantly in the coming months. Furthermore, the competition among the banks has started to settle and we are likely to a significantly smaller number of promotional offers.

Lastly, the upcoming changes in the corporate tax policy will also help the company in posting a higher level of earnings per share. The analyst upgraded the stock to Outperform from his Perform rating but reaffirmed the price target of $98. The analyst ratings for the company are 6 Buy, 3 Outperform, 18 Hold, 4 Underperform, and 1 Sell. The stock currently trades at a price of $77.42 and is up 2.15% from its opening price.