Citi Sees Buying Opportunity For American Express (AXP)

Citi Investment Research & Analysis analysts Donald Fandetti, Jeremy Banker and Michael Kaye maintained their Buy/Medium Risk rating for shares of American Express Company (NYSE: AXP) and the stock remained one of their Top Picks Live, with a price target of $55 per share.

The analysts noted that many investors have been concerned about what sort of impact the Durbin amendment may have on American Express' bottom line.

The analysts said that in a "bear-case scenario" American Express Company could lose up 1% to 3% of its total spend, according to their estimates.

The Citi Investment Research & Analysis analysts wrote: "Following the passage of Senator Durbin’s interchange amendment we have spoken with numerous professionals in the card and retail industry to assess the potential impact from card steering/discounting on AXP.

In summary, we do not expect a materially negative impact on AXP’s spending volumes and our bear-case scenario is that 1-3% of spend is lost, which would likely take several years to play out based on the Australian example. So we see little impact on our 2010-2012 estimates even in a bear-case. Every 1% increase/decrease in $ billed business equates to +/-9c of EPS our 2011 earnings estimate.

From a stock perspective, we believe that any share weakness around Durbin is a buying opportunity for this high quality global franchise."

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