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Citi analyst Arren Cyganovich lowered his price target on Amex to $148 from $150.
Photo by Andrew Haller/Bloomberg
American Express
The stock fell on Thursday after a Citi analyst said travel and entertainment spending was slowing, negative for the credit card company.
Analyst Arren Cyganovich lowered his price target
American Express
Stock Quotes:
AXP
) fell to $148 from $150 on Thursday, implying a 14% drop from current levels. He continues to rate the stock a sell.
Cyganovich wrote that a recent Citi study of credit card purchase data showed a slowdown in travel and entertainment spending in the second quarter. “We think this is the worst case for AXP as it has a higher level of travel and entertainment spending among its customer base,” he said.
The company declined to comment.
In the first quarter, spending in this area was up 39% from a year earlier when adjusted for foreign exchange effects. That helped the company’s first-quarter revenue rise to $14.28 billion from $11.74 billion a year earlier, beating Wall Street expectations.
“Consumer travel demand also remains high, with first-quarter bookings through our consumer travel business at the highest level since pre-pandemic,” Chief Executive Stephen Squeri said on a call to discuss the results. highest level.”
Amex isn’t the only credit card company seeing a surge in travel spending.
mastercard
(MA) reported strong first-quarter revenue, beating analysts’ expectations, and CEO Michael Miebach said the results reflected “resilient consumers and a continued recovery in cross-border travel.” .”
But Cyganovich said the big growth in travel and entertainment spending appears to be slowing, which isn’t a positive for AmEx.
“After a sharp decline in the pandemic in 2020 and early 2021, travel and entertainment activity in our data has increased and has remained resilient over the past few quarters,” Cyganovich said. “Our weekly data shows that Travel and entertainment spending has recently stabilized in the low to mid-single digits.”
According to one company, travel and entertainment accounted for 28% of a company’s global billing business, or cardholder spend, in the first quarter record. Goods and services spending accounted for 72%.
Amex shares fell 0.9 percent to $172.87 on Thursday. The stock is up 17% this year.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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