American Express upgraded to Overweight from Neutral at JPMorgan

JPMorgan analyst Richard Shane upgraded American Express to Overweight from Neutral with a price target of $205, up from $167. Entering 2024 the analyst believes investors should adopt a “more defensive positioning” in the consumer finance sector. This is a reversal from the firm’s bullish outlook in 2023 that was predicated on the belief that the market was fully discounting “the most anticipated/predicted economic slowdown in generations.” With multiples having rebounded towards historic norms, JPMorgan believes the risk/reward outlook for the space is less compelling. It believes lower and middle income borrowers are facing pressure from depleted pandemic savings and the lingering effects of high inflation, and expects American Express to offer investors “shelter from these forces.” Following a year end rally, price appreciation is likely to follow earnings growth rather than be driven by multiple expansion, contends JPMorgan.