) to strong buy from buy.
Analyst Bradley Berning says the firm's current valuation creates an attractive entry point with current economic risks and the EPS warning priced into the stock. He says American Express is trading at 15 times the P/E discount vs. the S&P 500 on 2001 EPS estimates (excluding a high-yield loss for Q1). He expects the stock to outperform, as second-half 2001 comparisons become easier and as high-yield bond losses are out of the way.
Berning says the company is well positioned to deliver on a normal historic EPS growth rate in 2002. He thinks a possible decision in the Dept. of Justice's trial against Visa and MasterCard is a potential catalyst. Berning cut the $2.20 2001 EPS estimate to $2.10, and kept his $2.49 2002 estimate and the $46 target price.