American Express has become confident enough to issue its first long-term revenue forecast since the advent of Covid-19, saying robust spending over its card network indicates its customers are adjusting to the “reality of the pandemic.”
Amex shares rose 8.9 percent on Tuesday after predicting revenue would grow 18-20 percent this year, in the mid-teens in 2023, and 10 percent annually from 2024. It was the first time the card company revenue has issued forecasts for more than a year since the pandemic began.
“When I look at our customer base, they clearly got better as time went on to learn how to adapt their personal and business lives to the reality of the pandemic,” CFO Jeff Campbell said in an interview. said. “We are really on the verge from a behavioral perspective of changing from a pandemic to an endemic one.”
Amex said its fourth-quarter profit rose 20 percent to $ 1.7 billion despite the rapid spread of the Omicron variant.
Expenditure on goods and services excluding travel and entertainment – which typically make up 70-80 percent of total spending on American Express cards – grew 19 percent compared to the previous year and 24 percent compared to 2019.
The recovery in travel spending, which is yet to return to pre-pandemic levels, was briefly halted last month, the company said, but January travel bookings have risen 44 percent so far compared to the same period in 2019.
Declines in travel spending have become less severe in scope and duration with successive variants, Campbell said, adding that he expected any future variants to have “very little impact” on goods and services spending.
“We are quite positive about the ability of our consumer and commercial customers to be ready for a very strong year of growth in ’22 and beyond,” he said.
Wall Street analysts said they were encouraged by the projections, especially given Amex’s reputation for being conservative with estimates.
“If I had to bet the farm, the lead would eventually be increased,” said Donald Fandetti, an analyst at Wells Fargo.
Many companies were reluctant to provide guidance during the pandemic because of the difficulties in predicting its impact on consumer behavior and the economy. This year, banks like Citigroup and Bank of America continued to avoid long-term projections.
Covid infections have declined in hard-hit countries such as the US and the UK, but daily infections are still close to all-time highs, according to the Financial Times. tracker, en health officials warn that progress can be reversed without the right precautions.
But investors were eager to put the pandemic behind them and some governments moved to facilitate guidelines. Most Covid restrictions in the UK were lifted from Wednesday and in the US, the Centers for Disease Control and Prevention scaled down the recommended isolation period last month.
“Hopefully the pandemic will have a less pronounced impact on our society,” said Sanjay Sakhrani, a KBW analyst. “Amex effectively made that assumption with the guidance they gave and they have a seat in the front row to see how spending habits are affected.”