American Express Catches Two Downgrades Following DOJ Lawsuit Announcement (AXP)


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Credit card issuer American Express Company ( AXP ) on Tuesday caught downgrades from two different analysts on the heels of today's announcement of a Department of Justice lawsuit against the company.

The lawsuit alleges that American Express used anti-competitive business practices with its merchants, in attempts to discourage customers from using non-AmEx credit cards.

Analysts at FBR Capital markets cut their price target for AXP to $45 on the news. That new target represents a smaller expected upside of 15% to the stock's Monday closing price of $39.05.

Meanwhile, Morgan Stanley cut its earnings estimates through 2012 for AXP, noting the company may be required to lower its U.S. credit card merchant discount rate. Still, the analyst maintained its "Overweight" rating and $52 price target on the stock.

American Express shares rose 40 cents, or +1%, in premarket trading Tuesday.

The Bottom Line
Shares of AXP have a dividend yield of 1.84%, based on last night's closing stock price of $39.05. The stock has technical support in the $36 price area. If the shares can firm up, we see overhead resistance around the $42-$44 price levels. We would remain on the sidelines for now.

American Express Company ( AXP ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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