A Morgan Stanley analyst raised her investment rating on American Express Co. on Monday, citing higher spending by shoppers as the U.S. economy improves.
Analyst Betsy Graseck upgraded the New York company to "Overweight" from "Equal Weight."
The analyst estimates spending will grow 10 percent this year and 11 percent in 2015, up from 8 percent last year.
Over the past year, consumers have become more confident and have been willing to take on debt. Most of those gains have come in the category that covers auto and student loans, but credit card borrowing has been rising, if more slowly. The Commerce Department's most recent report showed consumer spending rising 0.4 percent in December, the best gain in five months. Credit card debt climbed by $5 billion that month, the largest jump since May, according to the Federal Reserve.
American Express' customers tend to be more affluent, so they benefit disproportionately from higher housing values and a rising stock market. That could result in more spending, boosting card revenue for American Express.
Graseck also anticipates that American Express will get a boost from its new OptBlue program, which is aimed at boosting acceptance of American Express cards by small businesses in the U.S. Graseck expects the program will help AmEx win some market share from payment processing rivals Visa and MasterCard.
Graseck raised her 2015 and 2016 earnings estimates for American Express and lifted her price target on its shares to $100 from $90.
American Express shares ended regular trading on Monday up $1.34, or 1.5 percent, at $88.34. The stock is down 2.6 percent in 2014 but has gained 43 percent over the past 12 months.