American Express (AXP) Stock Forecast & Price Target

American Express reported a revenue increase of 3.3% sequentially and 8.7% year-over-year, reaching $17.2 billion, reflecting robust business performance. The company’s discount revenues, the primary driver of total revenues, rose 4.5% sequentially and 7.0% year-over-year to $9.2 billion, supported by increased consumer spending during the holiday season. Additionally, card member loans grew by 3.8% sequentially and 10.9% year-over-year, indicating healthy customer engagement and financial health within American Express's lending operations.

The key points leading to a negative outlook on American Express's stock include a decrease in the CET1 ratio to 10.5%, indicating potential concerns regarding capital adequacy amid an uncertain economic environment. Furthermore, the possibility of a sustained recession or slow recovery is projected to decrease transaction volumes and revenues significantly, while the decline in reserves for card loans and overall credit risk metrics raises concerns about future profitability. Additionally, heightened competition may hinder customer acquisition and retention, threatening market share and global acceptance rates, which are critical for maintaining revenue growth.