Is AXP Stock a ‘Sell’ after Its Q1 Earnings?

Today at 7:02 AM ET, American Express (NYSE:AXP) stock rose 1.1% to $84.10 in the pre-market session. The company reported its first-quarter earnings results on April 24 before the market opened. In the first quarter, AXP reported a GAAP EPS of $0.41 compared to $1.80 in the year-ago quarter. Analysts’ consensus earnings estimate was $1.43 per share for the first quarter. However, the financial services company reported an adjusted EPS of $1.98, which excludes the impact of credit reserve builds. AXP increased its credit provisions to $2.6 billion in the first quarter from $809 million in the first quarter of 2019. Plus, the revenues of $10.3 billion missed analysts’ consensus estimate of $10.65 billion. The revenues in the first quarter fell about 0.5% YoY (year-over-year).

According to a Reuters report, “Credit card issuer American Express Co said on Friday it would cut spending by nearly $3 billion in 2020 after its quarterly profit sank 76% as it set aside more money to brace itself against a wave of potential delinquencies.” The report also said, “The coronavirus pandemic has hammered the global economy, leaving people with an uncertain financial future. Several large U.S. banks have already stowed away billions of dollars to cover future losses as coronavirus-led layoffs and pay cuts would make it difficult for consumers to make loan payments.”

Many analysts revised their target price for American Express stock after its first-quarter earnings results.

• Piper Sandler decreased its target price from $119 to $106.
• Credit Suisse decreased its target price from $90 to $85.
• Compass Point decreased its target price from $140 to $78.
• Susquehanna decreased its target price from $135 to $120.
• Deutsche Bank decreased its target price from $112 to $108.
• BMO decreased its target price from $115 to $95.

AXP is covered by 27 Wall Street analysts. Among the analysts, 14 recommend a “buy,” 12 recommend a “hold,” and one recommends a “sell.” Wall Street analysts’ mean target price on the stock is $101.04, which implies a 21.5% gain from the current level of $83.17. The consensus target price for the stock has fallen from $113.87 in March—a fall of 11.3%.

American Express stock rose 0.86% on April 24 and closed at $83.17 with a market cap of $66.9 billion. The stock was trading 39.8% below its 52-week high of $138.13. Meanwhile, the stock was trading 24.1% above its 52-week low of $67.00.

Based on the closing price on April 24, AXP stock was trading 1.9% below its 20-day moving average of $84.80. The stock is also trading 14.6% below its 50-day moving average of $97.43 and 25.9% below its 100-day moving average of $112.17. AXP’s 14-day RSI (relative strength index) score is 45. The score suggests that the stock isn’t oversold or overbought.

On April 24, Visa (NYSE:V) and Mastercard (NYSE:MA) returned 0.6% and 1.1%, respectively. On Thursday, Visa will likely release its earnings report for the second quarter of fiscal 2020 (quarter ended in March). Analysts expect the company’s second-quarter reported revenue to rise by 4.9% YoY to $5.76 billion. They expect the company to post an adjusted EPS of $1.35 compared to $1.31 in the second quarter of fiscal 2019. Mastercard will likely release the results for its March ended quarter on Wednesday. The company could report total revenues of $4.0 billion with an adjusted EPS of $1.74.

On April 24, the S&P 500 Index has risen by 1.4%. Read US Stock Market Crash Reversal: Is a Double Bottom Next? to learn more.