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Fri, Jan. 22, 12:44 PM
Fri, Jan. 22, 12:23 PM| Fri, Jan. 22, 12:23 PM | 20 Comments
Fri, Jan. 22, 9:21 AM
Fri, Jan. 22, 8:44 AM
- While 2016's guidance was above forecasts, it includes an expected $1B gain from the sale of the Costco portfolio. Stripping this out implies weaker-than-hoped underlying growth, says Argus Research's Stephen Biggar.
- Nomura's Bill Carcache figures the Costco gain adds about $0.66 per share to the $5.40-$5.70 2016 EPS outlook.
- KBW throws in the towel, downgrading to Market Perform from Outperform. Jeferies remains on the sidelines, but cuts its price target to $58 from $70.
- UBS - which rates AmEx (NYSE:AXP) a Sell - cuts the price target to $54 from $67.
- Credit Suisse, Susquehanna, and RBC Capital join in the price target cuts.
- Shares -6% premarket to $58.97
- Previously: AmEx lower after earnings beat and guidance (Jan. 21)
Oct. 26, 2015, 9:12 AM
- "We simply do not see the company achieving its long-term guidance any time in the next several years," says UBS, downgrading American Express (NYSE:AXP) to Sell and lowering the price target to a Street-low $67 from $81.
- Said long-term guidance is for 12-15% EPS growth, and AmEx has promised it can return to that by 2017, but UBS sees just 8% growth between 2017 and 2019.
- UBS's Evidence Lab Survey doesn't bode well, says the bank, which now expects AmEx to lose 8% of its cardmembers following the Costco split in March vs. its previous estimate of just 2.5%. AmEx is also expected to lose 18% of its card portfolio.
- via Notable Calls
- Shares -1.6% to $73.37.
- Previously: American Express punished after weak quarter (Oct. 22)
Oct. 22, 2015, 10:01 AM
- Credit Suisse's Moshe Orenbuch reiterates his Underperform rating and cuts his price target to $71 from $74. He cuts his 2015 EPS estimate to $5.28 from $5.42, 2016 to $5.34 from $5.40, and 2017 to $5.75 from $6.
- AXP -6.5% to $71.51
- Speaking on the earnings call (transcript), CFO Jeff Campbell says U.S. transactions were up 7% Y/Y, but the average transaction size was lower by 3%, with the big slide in gasoline prices being a key driver. Airline spend was also down 3% Y/Y.
- There hasn't yet been significant earnings impact from Costco as lower volume growth has been offset by reduced marketing expenses associated with the co-brand portfolio. He offered no comment on the Costco portfolio sale discussions with Citi.
- Previously: AmEx dips after earnings miss (Oct. 21)
- Previously: American Express misses by $0.07, misses on revenue (Oct. 21)
Oct. 21, 2015, 4:18 PM
- Q3 net income of $1.266B or $1.24 per share vs. $1.477B and $1.40 one year ago. Float of 997M shares down from 1.047B. ROE of 26.8 down 200 basis points. Revenue of $8.193B down 1%.
- On an FX-adjusted basis, expenses were up 7% from a year ago as the company spent money on growth initiatives in the wake of the Costco loss.
- CEO: Ken Chenault: "We continue to expect quarterly earnings performance to be more uneven than it has been historically."
- Full-year EPS guidance is cut to $5.20-$5.35. Positive growth is expected to return in 2016, and the target range of 12-15% growth in 2017 "remains appropriate."
- U.S. Card Services income of $794M down 11% Y/Y on revenue of $4.7B, up 5%. Provisions of $390M up 23%, as reserves were added to this Q3 vs. a release in Q3 a year ago. Total expenses up 11% to $3.1B.
- International Card Services income of $89M down 37%, mostly due to King Dollar. Revenues fell 11% to $1.2B, but gained 4% on n FX-adjusted basis. Expenses gained 4% on an FX-adjusted basis.
- Global Commercial Services income of $151M down 26% Y/Y, on revenue of $817M down 9% (down 5% FX-adjusted).
- Global Network & Merchant Services income of $462M up 8%.
- Conference call at 5 ET
- Previously: American Express misses by $0.07, misses on revenue (Oct. 21)
- AXP -2.8% after hours
Oct. 5, 2015, 9:27 AM
- After a tough stretch for the stock - down more than 20% YTD - Discover (NYSE:DFS) trades at a relative P/E of 62% vs. the S&P 500, well below the long-term average of 70%, says analyst Kevin St. Pierre, upgrading to Outperform. His $69 price target is 33% above Friday's close.
- St. Pierre figures Discover is sitting on about $5.50 per share of excess capital above the target CET1 ratio of 11%.
- He also takes note of Discover's network - it has the same capacity as that of MasterCard and Visa, but is massively underutilized, says St. Pierre.
- He now has Outperform ratings on all of the card issuers. His favorites over the next 12 months are Capital One (NYSE:COF) and Synchrony Financial (NYSE:SYF), over the next two-three years DIscover, and American Express (NYSE:AXP) over the longer term.
- DFS +1.4% to $52.92 premarket.
Aug. 7, 2015, 1:33 PM
- Bloomberg reports activist ValueAct Capital has taken a $1B stake in American Express (NYSE:AXP).
- Shares have risen above $77 in response. They closed yesterday just $0.70 above a 52-week low of $74.30.
- Update (2:08PM ET): AmEx says it has been speaking with ValueAct, and looks forward to "continuing a constructive dialogue. Shares are now up 5.4%.
- Update 2: The full story is up. Bloomberg reports AmEx "isn't yet a core active target of ValueAct," while adding ValueAct "sees AmEx as a quality business with growth potential."
Jul. 23, 2015, 11:17 AM
- The bottom line at American Express (AXP -3%) was well ahead of consensus, notes Goldman, as lower-than-expected expenses and lower provisions offset declining revenues which fell short of hopes.
- Despite negative 5% EPS growth in 2015, the company reiterated its outlook for flat-to-down EPS for the full year, a return to EPS growth in 2016, and finally growth hitting the 12-15% long-term range in 2017. In Goldman's view, better-than-expected credit experience could make this year's EPS closer to "flat" vs. "down."
- Also on the positive side are encouraging Costco retention efforts in Canada which could bode well for the U.S. (50% of out-of-store spend was recaptured).
- Looking out, says Goldman, further clarity on the portfolio sale and U.S. retention efforts will likely be needed for the stock to outperform, but if EPS growth does hit that 12-15% range by 2017, it could translate into a higher multiple and stock price.
- Saying the upside trends for AmEx won't continue into H2, Jefferies sticks with its Hold rating and $85 price target.
- Earnings call transcript
- Previously: American Express -1.25% following earnings (July 22)
- Previously: American Express beats by $0.10, misses on revenue (July 22)
Apr. 27, 2015, 12:56 PM
- At year's end, American Express (AXP -1.2%) had more employees than any of its publicly-traded card issuing and payment network peers, say Bill Carcache and Yuman Lui. This includes Capital one, which operates a larger physical bank infrastructure.
- The two note AmEx's CEO recently emphasizing how digitization of payments is transforming the industry and how he's got expense levers to pull. Adding those two comments together, the team looks for AmEx to "opportunistically shrink its employee base." Perhaps the intervention of an activist might speed up the process?
- Source: Barron's
- Previously: AmEx lower as another sell-sider bails (April 27)
Apr. 17, 2015, 11:02 AM
- "If any doubt remained, it is very clear that dollar strength is a major problem right now for large multinationals," says Topeka, after going over American Express' (AXP -4.5%) Q1 results, and noting the corporate card business slowdown wasn't isolated to any particular industry.
- AmEx, notes the team, has 31% of its volume outside of the U.S. and is highly dependent on cross-border and business-related travel. 'This reads negatively for Mastercard (MA -1.4%), and, less so, Visa (V -1.4%)."
- AmEx earnings call transcript and presentation slides.
- Previously: AmEx beats on bottom line, but outlook still dour (April 16)
Apr. 7, 2015, 7:21 AM
Mar. 25, 2015, 3:12 PM
- In no surprise, American Express (AXP -1.3%) CEO Ken Chennault says the company is committed to its long-term 8%+ revenue growth target, and continues to see 12-15% EPS growth over time (though it's failed to hit that goal of late). Despite challenges, the company also doesn't back off of its ROE target of 25%.
- Webcast and presentation slides
- Helping EPS growth, of course, is a strong capital position allowing the continuation of buybacks, and AmEx repurchased 3.6% of the float in 2012, 4.6% in 2013, and 3.5% in 2014. After being flat-to-down in 2015, EPS growth should turn positive in 2016, says the company, and hit the 12-15% target in 2017.
- The stock turned higher as the presentations began at 1:30 ET, but has since returned to session lows. Not helping is Charlie Munger, speaking at the Daily Journal annual meeting, suggesting AmEx's "moat" is less than it once was.
Mar. 12, 2015, 12:31 PM
- American Express (AXP +2%) "shined" in its stress test, says Susquehanna's James Friedman, noting the new buyback of $6.6B vs. last year's $4.4B (the dividend was boosted 11.5% as well).
- Share count should fall by 5.7% through the end of 2016 Q2 vs. a 3.6% decline last year, says Friedman, who thus boosts his 2016 EPS estimate to $5.96 from $5.85. 2015 EPS is now expected at $5.58 from $5.56 previously.
- Previously: American Express boosts payout by 11.5% after CCAR approval (March 11)
Mar. 2, 2015, 8:13 AM
- Citigroup (NYSE:C) will become the exclusive co-issuer of Costco's (NASDAQ:COST) co-brand credit cards, and Visa (NYSE:V) will replace American Express (NYSE:AXP) as the credit card network for Costco in the U.S. and Puerto Rico, beginning April 1, 2016.
- On CNBC as the news hit, AmEx shareholder Warren Buffett: Citi won't get rich off the Costco deal.
- C +0.6%, V +2.4% premarket
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