American Express (AXP) Stock Surges Amid Interest Rate Stability, Analysts Forecast Potential Downside

AinvestMonday, May 12, 2025 1:46 pm ET
1min read

American Express (AXP) stock has surged 16% in the past month due to stable interest rate expectations. Analysts' average price target suggests a potential 2.52% downside from current levels, while GuruFocus estimates indicate a 9.1% downside based on GF Value. The Federal Reserve's tendency to maintain current rates has positively impacted rate-sensitive stocks like AXP.

American Express (AXP) stock has experienced a notable 16% increase over the past month, driven by stable interest rate expectations. Analysts' average price target suggests a potential 2.52% downside from current levels, while GuruFocus estimates indicate a 9.1% downside based on GF Value [1]. The Federal Reserve's inclination to maintain current rates has positively impacted rate-sensitive stocks like AXP.

American Express Global Business Travel (AMEX GBT) reported its Q1 2025 financial results, surpassing earnings expectations with an EPS of €0.16, compared to the forecasted €0.13. Revenue came in at €621 million, slightly below the anticipated €633.54 million. Despite the earnings beat, the market reacted negatively, with the stock dropping 7.76% to close at €6.89 on the news [2].

Analysts have noted that AMEX GBT appears undervalued with strong financial health indicators. The company's market capitalization stands at $2.99 billion, maintaining a solid position in the business travel sector. Key takeaways include an EPS exceeding forecasts by €0.03, showcasing strong earnings performance, and revenue falling short of expectations by €12.54 million. The stock declined by 7.76% in pre-market trading, following a broader market trend of cautious investor sentiment.

InvestingPro data reveals impressive gross profit margins of 60.09% and a healthy current ratio of 1.64, indicating strong operational efficiency and ability to meet short-term obligations. The company's adjusted EBITDA rose by 15% to €141 million, reflecting an expanded margin of 23%. The firm also improved its leverage ratio to 1.7x, demonstrating financial stability amidst challenging market conditions.

The company revised its full-year revenue guidance downward by 4%, now expecting flat revenue growth. However, it anticipates a 7% growth in adjusted EBITDA, targeting €510 million. AMEX GBT plans to generate €140 million in free cash flow, driven by cost savings and operational efficiencies.

Executive commentary highlighted the company’s "resilient revenue model and strong operating leverage," suggesting continued shareholder value creation. The CEO emphasized the firm’s commitment to "strong earnings growth, margin expansion, and cash generation" as key priorities.

Risks and challenges include potential macroeconomic instability impacting business travel demand, competitive pressures, currency fluctuations, and regulatory changes in key markets.

For deeper insights into AMEX GBT’s financial health and growth prospects, InvestingPro subscribers have access to 7 additional ProTips and comprehensive analysis through the Pro Research Report.

References:
[1] https://www.nasdaq.com/articles/notable-etf-inflow-dfac-axp-cop-gild
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-global-business-travel-q1-2025-beats-eps-estimates-93CH-4025314

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