American Express: Down 11% In A Month, Maybe Unfairly
(Preview) Company Update (AXP US) (Neutral)
Summary
AXP stock has fallen 11% since March 6, and has significantly underperformed Mastercard and Visa over the past year.
At $158.93, shares have a 16x P/E relative to 2022 EPS. AXP expects EPS to grow by 12-16% in 2023 and mid-teens from 2024.
The stock is cheap if AXP delivers on its outlook and targets, and Q1 2023 scheduled for April 20 contains few risks.
However, full-year 2023 will see headwinds in interest margin, customer engagement costs, credit provisions and the tax rate.
Overall, long-term structural risks, including on co-brands, make us reluctant to try to exploit short-term mis-pricings. Avoid.
Introduction
We review our Hold rating on American Express Company after shares have fallen by 11% in the past month, and ahead of Q1 2023 results scheduled for April 20. Over the past year AXP's share price has fallen by 13.5%, significantly underperforming Mastercard and Visa.
AXP shares may have been penalized unfairly in the past month, but long-term concerns remain. Shares have…