Merrill Lynch upgraded financial services firm American Express (AXP) to near term buy from accumulate after the company posted fourth quarter earnings per share of $0.50 compared with $0.44. American Express stock rose 1-7/8, to 46-7/8.
Analyst Michael Hughes said the company's fourth quarter profits came in a penny short of his estimate, but noted that fundamentals were okay, given a weak stock market in the fourth quarter and slower consumer spending. He said it was not surprising that the company lowered its EPS outlook "towards the bottom" of its 12% to 15% growth target.
He upgraded the shares on the weakness, noting that American Express will provide superior growth and financials will outperform this year given lower interest rates. Hughes lowered his 2001 EPS estimate a penny to $2.33. He has a $60 price target on the stock.