American Express (NYSE:AXP) Price Target Raised To $360 Into Earnings

American Express (NYSE: AXP) is riding a wave of positive sentiment, with strong consumer spending and improving credit metrics further bolstered by RBC Capital's recent decision to raise its price target on the stock from $310 to $360, reiterating an Outperform rating on the shares.

RBC's bullish stance is rooted in expectations of “healthy though modest” consumer activity, a seasonal uptick in loan balances, and continued improvement in credit quality within the consumer finance sector. According to their research note previewing Q2 results, monthly data indicates encouraging year-over-year declines in delinquencies and charge-off rates.

This, coupled with ample reserves and a more stable macroeconomic environment, is projected to support consistent allowance levels, further strengthening American Express's financial position.

• RBC Capital has consistently maintained an Outperform rating, raising their price target multiple times
• Most recent RBC price target of $360 represents a 12.7% upside from current price ($319.47)
• BTIG remains the most bearish with a Sell rating and $270 price target

The RBC Capital upgrade is the latest in a series of positive analyst revisions for American Express, reflecting growing confidence in the company's growth prospects. JPMorgan Chase, for instance, recently raised its price target to $342, reflecting a more optimistic outlook on the consumer finance sector due to reduced tariff-related uncertainties.

Truist Securities also chimed in, raising their price target to $335, while Keefe, Bruyette & Woods went even further, setting a target of $360, citing strong card spending and fee growth. These upgrades highlight the prevailing sentiment that American Express is well-positioned to capitalize on the current economic climate.

However, BTIG Research, for example, maintains a “Sell” rating on American Express with a price target of $230. They express skepticism about the company's ability to achieve its revenue growth targets, deeming them “aspirational.” This more cautious view underscores the inherent risks in relying solely on optimistic forecasts and highlights the importance of considering alternative scenarios.

Looking ahead, the upcoming Q2 earnings release will be crucial in validating the optimistic forecasts and assessing the sustainability of American Express's recent momentum. Analysts will be closely monitoring key metrics such as cardmember spending, loan growth, and credit quality to gauge the company's performance and its ability to navigate the evolving economic landscape.

Despite the prevailing optimism, valuation concerns linger. American Express is currently trading at a forward P/E of 19.85x, which is above its 5-year median and higher than the industry average. While the company's growth and fundamentals are undeniably robust, this elevated valuation could potentially moderate near-term gains. This suggests that while American Express may offer long-term potential, investors should be mindful of the potential for short-term price corrections.