The Oracle of Omaha, Warren Buffett, has long been bullish on American Express Company (NYSE: AXP) stock. Since the first quarter of 2001, when Berkshire Hathaway Chairman and CEO first invested in the company, the stock has soared by approximately 350%.
Over the past year, the stock has witnessed a remarkable surge of 20.5%. With such substantial gains, some investors may question if there is still room for further growth. However, despite the impressive ascent, American Express remains well-positioned, benefitting from the Federal Reserve’s pivot to lower rates in the current economic climate.
In the first quarter of 2001, when Berkshire Hathaway initiated their investment, American Express stock was trading at approximately $40. Today, it stands at around $187 – representing a remarkable upsurge of more than 3.5 times the initial investment. If an investor had committed $1,000 to the stock at the time Buffett first expressed his confidence, they would now be looking at a substantial $4,530. The annualized return on the investment would be a noteworthy 9.2% CAGR.
Berkshire Hathaway’s confidence in American Express is no secret, with the latest 13F filing revealing that it is the conglomerate’s third-largest holding, constituting 7.12% of the overall portfolio. Effectively, Buffett’s Berkshire Hathaway now owns over 20% of the company.
Looking ahead, American Express seems poised for further success, augmented by the reduced borrowing costs and diversified revenue streams that accompany its bank holding company status. Additionally, a potential increase in credit card spending due to settled inflation could further bolster Amex’s prospects.
Despite the recent gains, some analysts maintain a neutral outlook on the stock. However, some Wall Street analysts have revised their price targets upward for American Express. Deutsche Bank, for instance, initiated coverage on January 10 with a Buy rating and a price target of $235. Furthermore, JP Morgan raised their price target from $167 to $205, signifying sustained confidence in the company’s potential.
