Amex Stock Drops as BofA Analysts Warn of Weak Consumer Spending

American Express (AXP) shares traded lower Wednesday after Bank of America Securities analysts raised concerns that the stock was trading at a premium without too much potential for further growth.

BofA downgraded the bank holding company to “neutral” from “buy,” while maintaining its price target of $263.

“We see limited incremental upside given potential for subdued billings volume growth and current premium valuation,” BofA analysts wrote. “While we maintain a favorable view of Amex’s execution and strategy long-term, recent commentary from retailers and travel companies suggests the spending backdrop is challenging, even for the high-end consumer.”

Warning Signs On Consumer Spending

American Express’ challenges may stem from concerns around consumer spending.

BofA noted that every lodging company the firm covers has cut its 2024 revenue per available room (RevPAR) projections, due in part to a warning from Delta Air Lines (DAL) that extra airline seats added by the company this summer aren’t getting filled. That’s relevant because Delta SkyMiles credit cards are issued through American Express. 

That trend also aligns with BofA credit card data, which showed travel spending down 4% year-over-year in July, the analysts wrote. 

As a result, the firm projects American Express to hit the low end of its revenue growth outlook of 9% to 11% for 2024. The analyst consensus for full-year revenue for Amex is $65.96 billion, net of interest expense, equivalent to 9% growth from 2023, per consensus compiled by Visible Alpha.

American Express stock was down 2.8% trading at $245.88 late trading Wednesday, but is up roughly 32% year-to-date.