Is Rising Gen-Z and Millennial Demand Reshaping the Investment Case for American Express (AXP)?

• American Express recently reported strong third quarter results, supported by robust premium cardholder spending, a successful Platinum card refresh, and resilient credit performance, and raised its revenue and earnings guidance.
• An interesting element is that growth was significantly driven by Gen-Z and Millennial customers, highlighting the company's increasing appeal with younger cohorts and supporting long-term growth potential.
• We'll explore how the strength in premium customer spending and Platinum refresh impacts American Express's broader investment outlook.

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American Express Investment Narrative Recap

To be a shareholder in American Express, you need to believe the company can sustainably outperform through a focus on premium customers, innovative card products, and successful engagement with younger generations, especially as premium spending, younger cohort growth, and the Platinum refresh appear to be the biggest catalysts this year. Recent results were strong and the guidance increase is supportive, but the risk from rising competition and shifting consumer payment preferences remains material and unchanged in the near term.

Among the latest announcements, American Express’s Platinum Card enhancements, with elevated benefits and a limited-edition design, directly tie into the company’s product refresh catalyst and its aim to drive deeper premium card member engagement. These upgrades seem intended to reinforce differentiation in a crowded segment, positioning the Platinum offering as a key contributor to the growth highlighted in the latest earnings update.

By contrast, investors should be aware that... even with strong recent numbers, a downturn in premium consumer spending could pose a significant risk to future growth.

Read the full narrative on American Express (it's free!)

American Express is projected to reach $85.7 billion in revenue and $13.5 billion in earnings by 2028. Achieving this outlook would require annual revenue growth of 10.6% and an earnings increase of $3.5 billion from the current earnings of $10.0 billion.

Uncover how American Express' forecasts yield a $350.87 fair value, a 4% downside to its current price.

Exploring Other Perspectives

While recent news has been positive, the least optimistic analysts previously assumed revenue would grow just 9.0% a year and forecast profit margins narrowing to 15.2%. This more pessimistic narrative centers around risks like decelerating airline and entertainment spending. Your own expectations could be quite different, so it’s worth weighing these varied viewpoints.

Explore 7 other fair value estimates on American Express - why the stock might be worth as much as $366.63!

Build Your Own American Express Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your American Express research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free American Express research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate American Express' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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