Ahead of the Bell: American Express

posted: 38 DAYS 2 HOURS AGO

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NEW YORK -American Express' better-than-expected credit performance led an analyst to raise his rating and price target on the stock Monday.

FBR Capital Markets analyst Scott Valentin improved his rating on the credit card lender to "Market Perform" from "Underperform" and his price target to $37 from $25.

Shares of New York-based American Express closed Friday at $34.95.

In a research note, Valentin said American Express has "far exceeded our expectations" for credit performance. That should help it return to more normalized earnings sooner than other credit card lenders, even though industrywide credit losses aren't expected to peak until the second quarter of 2010, he wrote.

Both charge-offs — loans written off as not being repaid — and total delinquencies improved at American Express during the first nine months of the year, Valentin said.

American Express will also benefit from a weaker U.S. dollar because of its strong international operations, Valentin said. The lender's high-net-worth customer base and corporate business should also rebound and start increasing spending again before the broader population, he added.

Valentin increased his third-quarter, full year and 2010 earnings estimates for American Express as well.

He now predicts American Express will earn 37 cents per share in the third quarter and $1.30 per share for the full year. He previously forecast quarterly earnings of 27 cents per share and 2009 income of $1 per share.

Valentin now forecasts American Express will earn $2.16 per share in 2010, compared with a previous estimate of $1.25 per share.

2009-10-19 08:16:09