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AmEx Refurbishes Rewards on Marriott Credit Cards

Zacks Equity Research

American Express Co. AXP has revamped benefits and rewards on its Marriott International Cobranded Consumer and Business Credit Cards. The cards will provide additional benefits, rich offers and have a new design.

The refurbishment of the credit card involves replacement of the travel program’s three current loyalty brands, Starwood Preferred Guest, Marriott Rewards and The Ritz-Carlton Rewards with Marriott’s new loyalty brand, Marriott Bonvoy. This will be put into effect on Feb 13, 2019.  This movewill strengthen American Express’ 50-year-long ties with Marriott International.

The recent announcement shows the company’s concerted efforts to provide enhanced benefits to customers in order to retain existing and draw new ones, in a highly competitive payments market.

Last month, American Express revamped benefits and rewards on its Hilton co-branded credit cards.  It is the sole issuer of Hilton co-branded cards. The company also issues co-branded credit cards in collaboration with Delta Air Lines.

American Express’ growing relationships with Hilton, Delta Air and Marriott, poise it well for growth, especially after it lost Costco in 2016, one of its major client. Since then the company took a number of growth initiatives such as roll out of new products, enhancements of features on existing ones, changes to pricing, which are paying off evident from an increase in card fees from past many quarters.

We are optimistic about the company’s revenue growth going forward given its strong brand, continued efforts toward building business in new growth verticals, shift toward digital, focus on strategic initiatives.

However, the cost associated with the services provided by American Express cards such as airport lounge access and other travel benefits has caused an increase in cost of card member service. The same has been increasing over the past four years, reflecting higher engagement levels across its premium travel services. We expect cost of card member services to stay at elevated levels as the company continues to offer differentiated benefits and plans to continually to invest in Card Member Services.

In a year’s time the stock has gained  1.93% ompared with the industry’s decline of 21%.

 

American Express carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the same space are Federated National Holding Company FNHC, On Deck Capital, Inc. ONDK and Green Dot Corporation GDOT. Each of these stocks carries a Zacks Rank #2 (Buy) and has surpassed estimates in four reported quarters with an average positive surprise of 44.9%, 109.47% and 18.4%, respectively.

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

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