Analyst Jeffrey Adelson of Morgan Stanley maintained a Hold rating on American Express, retaining the price target of $311.00.
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Jeffrey Adelson’s rating is based on a combination of factors that reflect both positive and cautious elements in American Express’s recent performance. The company’s second-quarter results were solid, yet they faced higher expectations this quarter. While revenues were in line with Morgan Stanley’s estimates, the earnings per share (EPS) exceeded expectations primarily due to a lower tax rate rather than operational improvements.
Despite maintaining its EPS guidance, American Express has indicated that expenses will rise in the near term as it prepares to refresh its Platinum card and transition to a Category 2 bank. This refresh is expected to drive future revenue growth, but it will initially lead to increased costs. Additionally, while credit quality remains strong and overall consumer spending is healthy, there is ongoing softness in the small and medium-sized enterprise (SME) sector and travel and entertainment (T&E) spending, particularly in airlines and lodging.