American Express: Increasing Our Valuation About 6% as Net Interest Income Exceeds Expectations

Circling back to American Express following earnings, we are raising our fair value estimate to $178 from $169, which translates to a 2023 price/earnings multiple of 16 times, as American Express’ growth momentum has remained more resilient in 2023 than we had initially expected. Around $4 of the increase comes from earnings since our update, while higher net interest income and fee income expectations increased our fair value estimate by around $3 and $2, respectively. We have also adjusted our near-term discount revenue expectations slightly higher, but this was largely offset by higher credit expenses, a consequence of American Express’ rapidly expanding loan book.