DJ American Express Stock Is Falling Because of Global Travel Fears -- Barrons.com

By Ben Walsh

American Express stock, lifted by Friday's news of stronger-than-expected earnings, is falling back in response to concern about a slowdown in global travel and an analyst downgrade.

The shares (ticker: AXP) were down 3.5% in Monday trading. The stock has risen a bit more than 30% in the last 12 months, while the S&P 500 has gained about 23% in the same time.

U.S. equity markets were under pressure as investors worried that the effects of the coronavirus on global health and the economy may be greater than expected earlier. The disease has been diagnosed in patients in the U.S., France and Australia, and it has infected thousands and killed about 80 people in China, where it originated.

Several Chinese cities have been locked down by the government and travel-related stocks have taken a particularly hard hit. Airlines, cruise companies, and casino operators that depend on Chinese gamblers visiting Macau have tumbled.

American Express's large corporate charge-card business means that its shares are falling too. Investors appear to be worried about the impact of a potential slip in global travel generally, and corporate travel spending more specifically.

Stephens analyst Vincent Caintic downgraded the sock to Equal Weight from Overweight in a note to clients on Monday, saying the shares' valuation was behind the move.

He praised the company's executives for "achieving a stellar level of value creation" and wrote that "we think investors who continue to hold AXP shares will enjoy consistent, 12%-15% [year-over-year returns paralleling [earnings-per-share] growth in that range." American Express stock currently trades at about 15 times its projected per-share earnings for the next 12 months, compared with a five-year average of just over 13 times.

Write to Ben Walsh at ben.walsh@barrons.com

(END) Dow Jones Newswires

January 27, 2020 12:38 ET (17:38 GMT)

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