American Express Company (NYSE:AXP), a prominent player in the consumer finance industry with revenue of $59.24 billion, has reached a settlement with the U.S. Department of Justice and the Federal Reserve Board over an investigation into the company's past sales practices targeting small business customers.
The financial services firm, headquartered in New York, announced today that it will pay approximately $230 million to resolve the allegations. According to InvestingPro analysis, the company maintains strong financial health with a "GREAT" overall rating, suggesting robust operational stability.
American Express has stated that the agreements' costs were largely accounted for in previous periods and will not affect the company's financial guidance for the year 2024. The resolution with the Federal Reserve is expected to be finalized in the forthcoming weeks.
The company's proactive cooperation with regulatory agencies and the decisive actions taken to address the issues were highlighted in the statement. The payment of $230 million includes credits for some of the actions American Express took in response to the investigations.
In other recent news, American Express has been the subject of regulatory settlements, financial performance disclosures, and analyst revisions. The company has settled investigations into past sales practices with U.S. regulatory authorities, agreeing to pay approximately $230 million. This resolution allows American Express to move forward without the overhang of these investigations. On the financial front, the company disclosed its loan performance statistics, indicating a consistent rate of loans being 30 days past due and a slight fluctuation in the net write-off rate for principal only.
Analysts have also weighed in on American Express. RBC Capital upgraded its stock target to $330, citing the company's robust revenue durability and growth prospects. Truist Securities initiated coverage with a Buy rating, highlighting the company's dedicated customer base and international operations. In contrast, Compass Point revised its price target down from $325 to $315, maintaining a neutral stance.
These revisions come amidst American Express's robust third-quarter earnings, with an EPS of $3.49 and revenues totaling $16.6 billion, an 8% year-over-year increase. These are the latest developments in the ongoing story of American Express.
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