3) American Express Company (NYSE:AXP)
Expected Earnings Growth: 17%
Number of Hedge Fund Holders: 68
Forward P/E Multiple (As of September 30): 18.25x
American Express Company (NYSE:AXP) operates as an integrated payments company in the United States, Europe, and Internationally.
The company’s strong brand recognition and network effects continue to form a wide economic moat. American Express Company (NYSE:AXP) has been tagged as a premium card company in the industry, which helps it in targeting a more affluent customer base. Also, those cards demonstrate pricing power in the form of higher annual fees. Wall Street remains optimistic about its stable business model. American Express Company (NYSE:AXP) carries out operations as a closed-loop network for the cards that are issued.
As a result, the company can capture more of the economic profit of a single credit card payment as compared to other credit card issuers. Notably, strategic acquisitions remain underway with a focus on enhancing the dining portfolio.
Approximately 40 products are expected to be refreshed globally by year-end. American Express Company (NYSE:AXP) acquired 3.3 million new cards in Q2 2024, with 70% being premium fee-based products. This exhibits the company’s confidence in attracting and retaining high-quality premium customers. American Express Company (NYSE:AXP) should close FY 2024 with strong momentum, aided by its marketing and product refresh initiatives.
Moving forward, American Express Company (NYSE:AXP)’s growth trajectory should stem from its renewed focus on premium cards, attracting younger demographics and strategic partnerships. The increase in fee-paying customers, acceleration in annual fee increases, and maintenance of high retention rates should continue to act as tailwinds for the company’s stock.
Keefe, Bruyette & Woods increased their price target on the shares of American Express Company (NYSE:AXP) from $265.00 to $280.00, giving an “Outperform” rating on 8th July.
Artisan Partners, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:
“American Express Company (NYSE:AXP) shares rose 22% this quarter. This is an interesting case study given our earlier discussion about inflation. American Express operates one of the largest credit card networks in the world. Its revenue is largely a function of a fee rate applied to the dollar value of goods and services that are transacted through its network. That dollar value is, of course, nominal. As inflation pushes up the value of those goods and services as it has for the past few years, American Express will capture that value through its fee structure. The past few years inflation has clearly been a benefit. Aside from its inherent inflation protection, the business is a very strong one. Payments continue to shift toward electronic forms, benefiting American Express. It also has a strong brand that attracts loyal and highly profitable customers that are the envy of the industry. Recent results have been strong with revenues moving nicely ahead of GDP.”
