JP Morgan Boosts Amex As T&E Spending Stabilizes

Corporate T&E spending is stabilizing, according to JP Morgan Securities analyst Michael Freudenstein, who for that reason today raised his rating on American Express shares.

Freudenstein cited a recent Amex presentation indicating that commercial card volume trends were improving relative to their levels a year earlier, with December's volume down 20 percent versus 25 percent in November and 28 percent in October. Amex's commercial charge volume in September was down 35 percent versus the prior year, while August numbers also were down, though to a lesser degree at 11 percent.

Global Corporate Services will have cut 5,000 jobs by the end of 2002, Freudenstein noted, contributing to an expected annualized savings in GCS of $350 million. Freudenstein also cited a positive trend in that the "shift to interactive travel has not come at the expense of profit. While GCS charges 50 percent less for an interactive travel transaction, profit appears to increase by as much as 50 percent, owing to a lower cost of conducting business."