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AXP: American Express Makes a Bullish Break

Our near-term upside target has been confirmed


American Express (AXP) — On Oct. 17, this investment-grade, leading global payments and travel/expense service company broke from a five-month consolidation on heavy volume. The next day in my Trade of the Day column, I recommended AXP stock at $80 with a 12-month target of $96 and a trading target of $86.

In late November, AXP announced an agreement with U.S. Bancorp (USB) to accept U.S. Bank credit cards on the AmEx card network. Analysts are of the opinion that this new arrangement will enhance the credit-card experience of AmEx cardholders since U.S. Bank is renowned for its rewards and discounts. Wells Fargo (WFC) partnered with AmEx to offer credit cards on its network in August.

Analysts’ consensus estimate of earnings is for $5.45 this year and $6.05 in 2015. Standard & Poor’s has a five-star (strong buy) rating on AXP stock with a 12-month price objective of $109.

On Jan. 22 at $91, I reiterated our buy recommendation with a trading target of $100. On Friday, AXP stock broke from a bullish “V” formation, and so the near-term target of $100 is confirmed.

Longer-term investors may hold this investment-grade stock for S&P’s target of $109.

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