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American Express Stock Up 30% in 1H19: How Will 2H Play Out?

Zacks Equity Research

After witnessing a 4% decline in its stock price in 2018, American Express Inc. AXP performed  well in the first half of this year, with a nearly 30% increase in its share price.

The company’s strong operating performance and focus on its four strategic imperatives — expansion of leadership in the premium consumer space, further strengthening its position in commercial payments, fortifying its global, integrated network and making American Express an essential part of its customers’ digital lives — impressed investors.


American Express is seeing steady increase in customer engagement and acquisitions from its Member Get Member referral program as well as its innovative lending offerings such as Pay It Plan It for consumers and working capital loans for small and medium enterprises (SME). The company is generating strong billings across international especially in its consumer and SME segments, which is driving increased merchant coverage. These trends bode well for the company’s revenue growth in the second half of the year.

American Express distinguishes itself from its peers by virtue of its services provided to its members such as exclusive airport lounges and concierge services. Recently, the company announced the buyout of Resy, a digital restaurant reservation booking and management platform. With this deal, the company aims to provide a growing suite of digital-first benefits and services including 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. The company recently acquired 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, the company renewed its co-brand partnership with Delta Airlines through 2030. Delta’s large base of business customers provides many attractive opportunities to build on American Express’ strong position in commercial payments. Partnerships with the likes of Air Canada and SAP Ariba will also fuel its business in the second half of the year.

American Express loan business should also gain from a cut in interest rate, which is widely expected. A decline in interest rate would reduce the funding cost for American Express and help it to earn higher net interest income.

American Express currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some of the better-ranked stocks in the same space are Euronet Worldwide, Inc. EEFT, LendingClub Corp. LC and Synchrony Financial SYF. Each of these stocks carries a Zacks Rank #2 (Buy).

Euronet and Lending Club beat expectations in three of the four quarters with average positive surprise being 37.50% and 3.3%, respectively.
Synchrony Financial surpassed earnings estimates in each of the four quarters with average surprise being 14.2%.

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