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American Express Hits 52-Week High, Will the Rally Continue?

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American Express Co. AXP hit a 52-week high of $120.88 in yesterday’s trading. The recent deal to acquire Resy, a provider of digital restaurant reservation booking and management platform, strong performance in the recently reported result and other recent co-brand deals seem to have put the stock on its upward journey.

American Express has gained 17.6% in a year’s time, compared with its industry’s growth of 4%.


Investors have acknowledged the company’s strong operating performance and focus on its four strategic imperatives – expansion of leadership in the premium consumer space, build upon its strong position in commercial payments, strengthen its global, integrated network and make American Express an essential part of its customers’ digital lives.

American Express distinguishes itself from its peers in the card industry by virtue of the services provided to its members such as exclusive airport lounges and concierge services. Recently, the company announced to buy Resy, the digital restaurant reservation booking and management platform.

With this deal, it aims to provide customers with its growing suite of digital-first benefits and services. This includes providing card members with access and experiences across travel and lodging, airport lounges, exclusive events and dining.

American Express has been making efforts to expand in the lucrative hospitality and dining industry. In this vein, the company has recently made a number of acquisitions, which include personal travel assistant app Mezi, UK dining reservation platform Cake Technologies, airport lounge discovery and booking platform LoungeBuddy, and Japanese premium restaurant reservation platform Pocket Concierge.

Recently, American Express renewed its co-brand partnership with Delta Airlines through 2030. The company’s large base of business customers provides many attractive opportunities to build on American Express’ strong position in commercial payments.

Investors are optimistic about the company’s growth in the past many quarters, which mark a recovery from the loss of revenues suffered due to the termination of its partnership with Costco in 2016.

Since then, American Express has undertaken a number of strategic initiatives such as forging co-brand partnerships, making investments in technology, and increasing marketing and advertising. The company has also refurbished rewards and facilities on its cards and upgraded credit cards from time to time.

American Express has a long-term growth path given its brand name, a superior client base, expanding suite of services and growing co-brand partnerships. These factors have helped the company retain customers against players like Mastercard Inc. MA, Discover Financial Services, DFS, Visa Inc. V and others.

The company continues to invest in new services and Card Member benefits, new card acquisitions and expanding its merchant network, which is likely to drive its growth as well as its stock.

American Express carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Discover Financial Services (DFS) : Free Stock Analysis Report
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