A bank might be interested in American Express to grow their card-issuing business and push further into high growth/return payments sector, Citi analyst Donald Fandetti writes in note.
- AXP hypothetical takeout value of $81/shr would be 37% premium to last close $59
- AXP generates ~25% ROE vs banks’ ~9%-12%; banks with traditional retail deposits have much lower cost of funding, which would drive synergies
- AXP shares (buy, PT $70) “clearly cheap” at 10x Citi’s 2017 earnings est., stock is at steep discount to S&P 500 vs historical 1.02x relative multiple