American Express is poised to benefit from accelerating card fees just as customer engagement tied to rewards and other membership perks declines, and that puts its stock in a good position, according to BofA analysts.
The payments giant is fresh off its third-quarter earnings, when it reported a 13% gain in adjusted earnings per share and a nearly 9% revenue gain. The company also announced plans to cut about 5% of its global workforce.
BofA research analysts led by Mihir Bhatia lowered their price target to $369, or 16 times their estimated 2028 earnings-per-share forecast, down from $382, or nine times 2027 earnings previously. They reiterated their Buy rating.
The analysts said "The bigger picture is that card fee growth [of 17%] is re-accelerating just as VCE [variable customer engagement] growth is set to slow." They called that "a nice set-up" heading into 2027, when comparisons to this year's numbers get tougher.
American Express shares closed up 0.6%, at $315.05, on Monday afternoon trading, while the S&P 500 index closed up 0.7%. Amex stock is down 14.8% this year and down 12.9% over the past 12 months.
American Express CEO Stephen Squeri said last week that they had "good momentum, but to accelerate innovation and win over the next few years we need to become a more agile and efficient organization."
About a year ago, American Express revamped its Platinum card option, raising the annual fee and adding new perks. The analysts noted that Platinum spend retention is nearly 99% one year after the refresh.
They also raised their 2026 earnings per share estimate to $17.72 a share, up from $17.40 previously, and their 2027 EPS estimate to $20.14, from $20.12 previously.
American Express' third-quarter adjusted net income of $3.2 billion excluded a $982 million pre-tax gain from the previously-announced sale of its equity interest in Global Business Travel Group.
BofA analysts wrote that about two-thirds of that GBTG gain "drops to the bottom line," and the rest funds the company's job cuts. "We read this as creating room for marketing and tech investment in 2027 while protecting operating leverage," they said.
Amex and Airbnb said a new exclusive partnership will bring more than one million of Airbnb's listings to Amex's travel portal and allow cardholders to earn rewards when booking stays.
"AXP keeps adding to its value proposition, most recently with an exclusive Airbnb partnership and new Centurion lounges," the BofA analysts wrote.
Amex on Friday narrowed its full-year adjusted earnings guidance to $17.60 to $17.90 a share, from $17.30 to $17.90 a share previously. The credit card company said it remains on track for full-year revenue growth of 10%.
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