AmEx Shares Up On Analyst Upgrade, Card Loans Performance
16 Septiembre 2009 - 4:09PM
Noticias Dow Jones
Investors pushed up the shares of American Express Co. (AXP)
Wednesday, encouraged by the performance of its card loans and an
upgrade from an analyst.
The shares ended Wednesday at $35.84, up $1.19 or 3.43%. The
stock has traded in the range of $9.71 and $41.10 in the last 52
weeks.
Analyst Michael Taiano at Sandler O'Neill upgraded AmEx stock to
a 'hold' from 'sell.' The move was fueled by "steady credit
improvement," Tiano said in a note published Wednesday.
AmEx shares also got a boost from a monthly report card issued
Tuesday by the company, outlining the performance of credit card
loans, including those packaged into bonds.
In this report the company said that the number of U.S.
borrowers at least a month behind their card payments decreased
modestly to 4.1% in August from 4.2% in July. This decline in
delinquencies, a key gauge of future losses, is important because
higher delinquencies force issuers to squirrel away capital to
reserve for potential losses; ultimately, companies must write off
loans if customers can't pay up.
The slowing pace of delinquencies is also noteworthy because it
comes at a time when seasonal factors - such as good behavior on
the part of borrowers fueled by tax refund checks - are behind the
card industry.
"AmEx was the strongest performer from its group," said Scott
Valentin, an analyst at FBR Capital Markets. Issuers of plastic,
including Capital One Financial Corp. (COF), JPMorgan Chase &
Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc. (C) and
Discover Financial Services (DFS) also released reports Tuesday,
outlining the monthly performance of their credit card debt
securities.
AmEx wrote off in August 9% of its card loans, including those
packaged into bonds. In July, the company wrote off 9.2% of its
U.S. card loans.
The company said last month that better-than-expected bankruptcy
trends contributed to the decline in write-offs.
Like other card issuers, AmEx has been hurt by cutbacks in
spending and customers who are falling behind on their bills in the
current economic slump. Unlike other card companies, AmEx both
issues cards and processes transactions. Furthermore, it issues
both charge cards requiring a monthly payoff and credit cards on
which customers can carry a balance.
-By Aparajita Saha-Bubna, Dow Jones Newswires; 617-654-6729;
aparajita.saha-bubna@dowjones.com