Q1 earnings surge: Is American Express headed for $250?

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on Apr 25, 2024
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  • AXP's resilience: Survived crises, long-term bullish trend.
  • Short-term momentum suggests potential push to $250.
  • Traders advised to buy with stop-loss at $215 support.

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American Express (NYSE:AXP) impressed investors with its Q1 2024 earnings report released on April 19th. The company showcased robust growth, with revenue climbing 11% to $15.8 billion and earnings per share (EPS) surging 39% to $3.33, surpassing expectations.

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Key drivers of this performance included higher net interest income and increased Card Member spending. Despite a rise in consolidated provisions for credit losses to $1.3 billion, compared to $1.1 billion a year ago, American Express remained on solid footing.

Management’s reaffirmation of their full-year 2024 guidance, projecting revenue growth of 9-11% and EPS of $12.65 to $13.15, further bolstered confidence. Noteworthy highlights from the quarter included strong growth in International Card Services, a 17% increase in loans, and a significant uptick in spending among Millennial and Gen-Z demographics.

Investors reacted positively, with the stock jumping over 5.5% following the announcement. Since the earnings release the stock has appreciated by close to 10%, but can this rally continue?

The star performer

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Despite facing competition from numerous payment processing companies and fintech startups, American Express has continued to remain one of the best-performing financial services companies in the world.

During the financial crisis of 2009, the stock fell from above $60 to below $10, but then it started a bull run that generated more than 2,400% in return for investors as it currently trades close to $240. That bull run remains intact to date.

AXP chart by TradingView

Like most stocks, AXP also crashed during the bear market that started post-COVID-19 pandemic, but it recovered quickly and made an all-time high near $200 in February 2022. After that, the stock entered a minor downtrend, which lasted for more than 18 months but ended last year in October.

The long-term charts suggest that the stock is going to maintain its upward journey going forward. So, investors who have been holding on to the stock for a long time can continue doing so without any worry.

Short-term momentum may push to $250

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When we look at AXP’s short-term 4-hour chart, an even more aggressive bullish momentum becomes evident. Since the start of November last year, the stock has generated more than 50% returns going from a low near $140 to a high above $240.

At the start of this month, going into the earnings, the stock did face some headwinds above $225, but post Q1 earnings those seem to have gone. Short-term momentum indicators that had turned negative have turned positive or are on the verge of turning positive.

AXP chart by TradingView

At this juncture, it appears that AXP can breach the coveted $250 mark easily. Hence, traders who are bullish on the stock in the short term can buy it with a stop-loss below the $215 support. Traders with bearish sentiment must wait for the stock to fall below $215 before initiating any short positions. Falling below $215, the next support for AXP can only be found near $178.

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