AmEx downgraded to Neutral at Monness as valuation seen capping further upside

Investing.com -- Monness, Crespi, Hardt downgraded American Express (NYSE: AXP) to Neutral from Buy, saying the stock’s 45% rally this year has fully priced in near-term positives and left little room for multiple expansion without a sharp pickup in spending or earnings growth.

The firm left its earnings estimates unchanged but said the stock now trades near the 93rd percentile of forward earnings multiples, making further gains harder to justify unless AmEx sees an “upward revision driver” in the second half of 2025 or into 2026.

“Valuation drove the majority of 2024 gains,” the analysts wrote, adding that AmEx has already recovered from its March-April dip.

They said investors are likely demanding clearer evidence of spending or EPS acceleration before assigning a higher multiple.

AmEx’s forward multiple has risen from about 15x at the start of 2024 to more than 19.5x, and the note warned that even on generous assumptions, a further 10% return would require a 21x multiple, well above historical averages.

Still, Monness expects AmEx to hit its high-teens EPS growth target, aided by strong loan book performance and resilient high-end spending.

Affluent consumer trends remain healthy, with premium travel outpacing main cabin by 10 percentage points at co-brand partner Delta, and restaurant spending also improving sequentially.

However, absent stronger volume growth or clearer upward earnings revisions, the firm views risk/reward as balanced and sees valuation expansion as a “heavier lift” from current levels.

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