American Express downgraded to Neutral by BofA Securities

BofA Securities downgrades the stock of financial services company American Express (AXP) from a Buy rating to Neutral while analysts hold their price target at $263 per share.

Julie Hyman and Josh Lipton review the analyst note from BofA, which cites headwinds in billings volumes growth and travel expenditures.

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This post was written by Luke Carberry Mogan.

Video Transcript

All right, let's get to some calls on the day now.

B of a security is downgrading American Express from buy to neutral the notes citing limited upside for billings.

Volume growth Analysts didn't really, uh, love the valuation either on this name.

That was another big point.

But they say they are, uh, favourable, actually, on Amex's execution and strategy.

No problems there long term.

But recent This was interesting.

Recent comments Terry, they say from retailers and travel companies suggest the spending backdrop is challenging even for the high end consumer.

Um, and they go to a hold in the sidelines.

Julie, I mean, Bank of America has a lot of credit card data and it its disposal.

And so the analyst there cites that as well.

Um, no Bank of America as well, sort of comparing it to what Amex is seeing.

So they say that, um, first of all, the analyst notes, Amex partner Delta noted that extra seats added this summer are not getting filled, so that's one of the areas where they're seeing that we demand.

And they say this is consistent with that Bank of America aggregated credit card data that showed spending on travel was down.

Um, Amex is one of those products that's known as being particularly tied to travel tied to business travel, but also leisure travel to some extent.

So I I that also caught my eye that, like zeroing in on travel and what's going on there in a soft landing environment, though, So they moved to the islands on this name.

So what are they actually like?

I thought it was interesting.

They see stronger upside opportunities in that soft landing environment names like Capital One and Synchrony.

These issuers trade at a lower PE multiple relative Amex and are likely to see larger improvements incentives.