American Express Earns Upgrade
JPMorgan has upgraded American Express (NYSE:AXP) to Overweight in its second-quarter consumer finance outlook, identifying the company as its preferred name in the sector despite mounting geopolitical and economic uncertainty.
American Express shares rose around 1% in premarket trading following the analyst upgrade.
Broker Warns of Tougher Backdrop
While taking a more positive stance on American Express, JPMorgan adopted a cautious view of the wider consumer finance industry.
Analyst Richard Shane said the “pause, not peace” environment that characterised the first quarter has returned after the breakdown of the 60-day U.S.-Iran memorandum of understanding signed on 18 June.
According to Shane, “the risk of further escalation is elevated,” raising the possibility of another spike in energy prices that “would squeeze lower- and middle-income consumers most acutely.”
Labour Market and Interest Rates Add Pressure
JPMorgan also pointed to signs of a weakening U.S. economy that could weigh on consumer spending.
Shane noted that the labour market is “cooling rather than improving,” highlighting June’s increase of just 57,000 nonfarm payrolls and arguing that the decline in the unemployment rate to 4.2% was “largely by falling participation rather than strong hiring.”
The broker also observed that the outlook for interest rates has become more restrictive, with mortgage rates climbing to around 6.5% following the renewed conflict, limiting refinancing activity and adding further pressure on household finances.
Selective Approach to Consumer Finance
Against this backdrop, JPMorgan said it continues to favour a disciplined stock selection strategy across the sector.
“Selectivity and discipline remain paramount across our coverage,” Shane wrote.
The bank left all other ratings within its consumer finance coverage unchanged while introducing 2027 price targets for the companies it follows.
Macro Risks Remain in Focus
JPMorgan believes the broader economic impact of recent geopolitical developments has yet to be fully reflected in financial markets or consumer behaviour.
The broker concluded that “the full impact of these geopolitical and macro shocks on the real economy has yet to be realized.”
American Express stock price
