American Express Down 2%; Bank of America Cuts to Underperform

By Michael Dabaie

American Express Co. shares fell 2% to $96.32 in morning trading.

Bank of America Global Research downgraded American Express to Underperform from Neutral and lowered its price objective to $95 from $106.

Bank of America noted that it has been impressed by management's execution and the company's resilience during Covid-19, but said it is concerned about near-to-medium term billing volumes, particularly airline and lodging spend.

"Travel spend could take some time to fully recover based on the results of BofA's Proprietary Global Travel Survey and industry commentary. AXP is over-indexed to travel and we think prolonged travel spend weakness will weaken sentiment for the shares," Bank of America said in the analyst note.

BofA sector analysts estimate it could be 2024 before spending volumes on airlines and lodging are at 2019 levels, and a full recovery is dependent on a vaccine being available and widely administered, the analyst note said.

"This is consistent with results from our proprietary Global Travel Survey...which suggests over a third of consumers are waiting for a vaccine to be available before travelling internationally and a significant portion are concerned about getting on an airplane or staying in a hotel. As such, we think travel could be an overhang for AXP billings growth over the near-to-medium term," Bank of America said.

Write to Michael Dabaie at michael.dabaie@wsj.com

(END) Dow Jones Newswires

September 23, 2020 11:03 ET (15:03 GMT)

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