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Pro Analysis

American Express to rally nearly 20% as tax cuts lead to higher billings from business customers, analyst says

Man walking past American Express Travel Services office
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Investors should buy American Express shares on the company's cost-cutting plan and a possible boost to the bottom line from President Donald Trump's tax reform plan, according to Keefe, Bruyette & Woods, which upgraded the credit card company to outperform from market perform.

"We believe the low end of the company's 2017 EPS guidance is very achievable just through stated operating cost reductions and capital management," analyst Sanjay Sakhrani wrote in a note to clients Sunday. "Our analysis shows that historical changes in tax rates (both personal and corporate) have been catalysts for billed business growth (and GDP growth). ... We also believe a lower corporate tax rate benefits AXP's EPS, too."