Wells Fargo says buy the dip on American Express (AXP).
Analyst Donald Fandetti is out Monday reiterating an Overweight rating (Buy equivalent) and $200 price target on shares of American Express. The call assumes at least 20% upside in the card issuer's stock. Fandetti also lifted his earnings per share estimate on Amex for 2022 by 35 cents. The stock is a "top pick" for Fandetti.
The report arrives as shares of the Dow component have dropped about 13% from a 52-week high hit on Oct. 22. Shares have lagged the Dow since late November.
"While the Delta and Omicron variants have slowed the stock progression recently, earnings and card spend have marched upward. Their weighting largely to domestic U.S. consumer and small business has shielded them from the more challenging cross border travel environment," Fandetti explains.
By and large, Amex has had a strong year so a solid conclusion to it wouldn't be a surprise.
American Express saw top- and bottom-line growth within all of its business segments in the third quarter as the global economy continued to claw back from the COVID-19 pandemic. The results were paced by the company's largest segment, Global Consumer Services. Sales rose 21% from a year ago to $6.4 billion. Pre-tax profits increased to $1.5 billion from $1.1 billion a year ago.
Meanwhile, profits at Amex's Global Commercial Services segment notched a profit of $718 million from $272 million last year. Profits in the Global Merchant and Network Services segment clocked in at $529 million, compared with $326 million a year earlier.
Amex CEO Stephen Squeri struck an upbeat note on the business several weeks ago at Yahoo Finance's All Market Summit.
"We are anticipating a strong holiday season both online and offline," Squeri said.
Amex shares fell about 2% on Monday amid a broader pullback in the markets.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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