Friedman Billings isn’t seeing a return to glory days for American Express (AXP). They just see skewed metrics and weak trends:
We reiterate our Underperform rating as our expectation for increasing losses and lower spend continues to develop. At first glance, May’s monthly trust data reported yesterday exhibited promising credit trends; however the improvement was attributable to a $10B addition to the trust. Excluding the impact of the addition, underlying trends continue to show marked stress for the consumer even in the prime segment. We continue to believe credit deterioration will be worse than most investors expect in 2H08, leaving further downside for AXP shares.
Friedman Billings reiterates UNDERPERFORM, target price $38.
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