UPDATE 1-Merrill cuts American Express price target by $4
(Recasts; adds details)
Oct 8 (Reuters) - Merrill Lynch cut its price target on American Express Co (AXP.N) citing a potential rise in credit losses for the U.S. card issuer and said it expects more bad news for consumer and commercial finance companies going forward.
Analyst Kenneth Bruce lowered his price target on the company by $4 to $28 and forecast the card issuer and processing network to earn 51 cents a share for the third-quarter, well below the consensus forecasts of analysts polled by Reuters Estimates.
The brokerage added that Capital One Financial Corp (COF.N), a credit card and banking company is well-positioned to acquire deposits, and investors will look at the company's acquisition plans given its recent capital raising measures.
American Express' overseas operation, which managed the double-digit growth in first half of 2008, is likely to experience a slowdown in the second half of 2008, putting more pressure on earnings as U.S. economic slowdown expands to the rest of the world, Bruce said.
The brokerage, however, said both American Express and Capital One have sufficient liquidity to meet near term obligations.
American Express shares rose 2.37 percent to $28.92, while Capital One shares were trading up 2.08 percent to $38.33 in mid-day trade on the New York Stock Exchange. (Reporting by Anurag Kotoky in Bangalore, Editing by Dinesh Nair) ((anurag.kotoky@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: anurag.kotoky.thomsonreuters.com@reuters.net))
