Skift Take

AmEx will need to go full-court press on Marriott to keep the Starwood relationship alive. It's not a deal AmEx can afford to loose.

American Express Co. climbed the most in the Dow Jones Industrial Average after first-quarter profit beat estimates and some analysts raised their price targets on the stock.

AmEx, the biggest U.S. credit-card issuer by purchases, gained 3 percent to $66.95 at 9:32 a.m. in New York, the most since Oct. 5. The shares have lost 3.4 percent this year and 14 percent in the past 12 months as the company has endured the loss of key co-brand partners, including Costco Wholesale Corp. and JetBlue Airways Corp.

The lender reported per-share earnings late Wednesday of $1.45, exceeding the $1.33 average estimate of 29 analysts surveyed by Bloomberg. Net income slid 6.5 percent to $1.43 billion from $1.53 billion a year earlier, AmEx said in a statement. Worldwide billed business, or customer card spending, advanced 3.3 percent to $253.8 billion, the company said. Revenue increased 1.6 percent to $8.09 billion, in line with the estimates.

AmEx “reported a good quarter, with revenues coming in stronger than expected and spending trends showing resiliency,” said Sanjay Sakhrani, a KBW analyst who raised his target price to $74 a share from $67. Still, “we feel that AXP still has a fair amount of work cut out for it over the next year,” he wrote in a note to investors, referring to the company’s stock symbol.

Leap Year

The company benefited from having an extra day in the quarter because of leap year, which accounted for “substantially all the improvement,” Ryan Nash, a Goldman Sachs Group Inc. analyst, said Thursday in a note. For AmEx, it “could be a challenge” to reach its 2017 target of earnings per share of $5.60, he said.

“We expect the shares to react positively to the results given the improvement in billed business and revenues,” said Nash, who raised his 12-month target price to $64 from $62. “However, we remain skeptical from here.”

Last year, American Express said it was ending its U.S. partnership with Costco, a relationship that accounted for 20 percent of the AmEx’s worldwide loans and 8 percent of customer spending, and its agreement with JetBlue. AmEx may lose another valuable credit-card partner if Marriott International Inc. completes its acquisition of Starwood Hotels & Resorts Worldwide Inc., analysts including RBC Capital Markets’ Jason Arnold have said.

©2016 Bloomberg L.P.

This article was written by Jenny Surane from Bloomberg and was legally licensed through the NewsCred publisher network.

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Tags: american express, jetblue airways, starwood

Photo Credit: The SPG co-branded credit card with American Express. American Express