American Express says it did not see signs of credit stress in Q2

July 22, 2023 01:18 AM AEST | By Invezz

American Express says it did not see signs of credit stress in Q2 — Image source: Invezz

Why are American Express shares down today?

Despite hitting an all-time high, spending growth, nonetheless, slowed down versus the prior quarter.

The stock is responding also to $15.05 billion in revenue net of interest expense that came in shy of Street estimates. Still, Betsy Graseck – a Morgan Stanley analyst remains bullish on AMEX.

Our top pick in this space is American Express, which we expect to continue benefitting from an ongoing travel and entertainment boom.

For the full financial year, American Express continues to see up to 17% growth in revenue on $11 per share to $11.40 per share of earnings, as per the press release.

Notable figures in AMEX Q2 earnings report

Earned $2.17 billion versus the year-ago $1.96 billion
Per-share earnings also climbed from $2.57 to $2.89
FactSet consensus was for $2.81 of earnings per share
Networks volumes jumped 8.0% YoY to $427 billion
Provisions for credit losses stood at $1.20 billion

Is it worth investing in AXP?

American Express also revealed today that 70% of new accounts in Q2 were from its premium offerings. More importantly, CFO Jeffrey Campbell said delinquency rates remain unchanged versus the prior quarter and signs of credit stress were not evident either.

Morgan Stanley’s Graseck sees upside in AMEX to $188 that suggests more than a 10% gain from here. The stock is already up nearly 15% versus the start of the year.

On Friday, the card issuer also announced a 10-year extension on its partnership with Hilton Worldwide.

The post American Express says it did not see signs of credit stress in Q2 appeared first on Invezz.

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