Aug 6 (Reuters) - Credit problems at American Express Co (AXP.N), the largest U.S. credit card company, may be stabilizing, analysts said on Thursday, and at least one brokerage upgraded the stock.
American Express said on Wednesday credit card defaults fell for a second straight month in July, helped by lower-than-expected bankruptcies, and said its charge-off rate would end 2009 below 10 percent.
Citigroup’s Donald Fandetti urged investors to buy the stock, and added it to the “top picks live” list. He said with declining July charge-offs and continued improvement in delinquency trends, American Express may have “turned the corner” on credit.
“We believe American Express’ charge card and higher-end focus are the envy of card issuers as they are where others need to go,” the analyst said in a note to clients.
American Express was the fastest growing credit card company during the credit boom of 2003-07, but the company paid a heavy price when the bubble burst last year and mounting credit losses sent its earnings spiraling lower.
Keefe, Bruyette & Woods analyst Sanjay Sakhrani said American Express clearly is back on track after contending with substantial adverse credit trends.
American Express shares were up about 3 percent at $31.15 before the bell. They closed at $30.36 Wednesday on the New York Stock Exchange. (Reporting by Anurag Kotoky in Bangalore; Editing by Anil D‘Silva) ((firstname.lastname@example.org; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: email@example.com))