American Express: stock falls on broker downgrade

(CercleFinance.com) - (CercleFinance.
com) - American Express closed down 2.7% in New York yesterday, after Bank of America announced that it was downgrading the stock from 'buy' to 'neutral', while maintaining its target price at E63.

The broker explains that the valuation premium on which the credit card issuer trades on the stockmarket deserves more than just a good ability to execute in view of the current slowdown in consumer spending.

The broker now explains that it sees more limited upside potential in a context of weak growth in customer spending by the financial services group.

BofA points out that the latest consumer spending surveys have been lackluster, meaning that AmEx's sales growth is likely to be at the lower end of the group's target range of 9% to 11% this year.

Assuming a soft landing for growth, the professional says he prefers stocks with greater exposure to the credit sector, such as Capital One, where he sees more potential in terms of multiple upgrades.


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