American Express can do well even as the U.S. consumer faces headwinds, according to Bank of America. The bank called American Express a top pick, reiterating a buy rating and a price target of $205 per share. That target implies upside of nearly 20% from Monday's close. Analyst Mihir Bhatia said despite risks remaining to the broader sector if consumer spending slows and credit normalizes, American Express should continue to be more resilient than peers. "AXP is our top pick in the sector due to its super-prime and high income cardmember base, which is better protected from inflation pressure," Bhatia said. "US Consumer credit performance has been resilient, new card acquisitions strong, and spending momentum solid." American Express stock has added more than 16% in 2023, outpacing rivals Visa and Mastercard. AXP YTD mountain American Express stock has climbed 16.2% from the start of the year. But targets for the remainder of 2023 going into 2024 are still concerning for American Express, Bhatia added, against a weakening macroeconomic backdrop and "exhaustion of COVID bounce-back travel spending." American Express will report second-quarter results July 21. Analysts polled by FactSet forecast adjusted earnings per share of $2.81 while BofA expects $2.79. "The uncertain macroeconomic picture (and a looming recession) remains a key overhang for the consumer finance stocks in our coverage. 2Q results and earnings calls could provide incremental clarity about the health of the U.S. consumer, real-time data on spending trends, and management expectations about credit outlooks," the analyst wrote. — CNBC's Michael Bloom contributed to this report.
