American Express (AXP): Headline Beat Flattered by Tax and Reserve Release; Softer Billings and Expense Pressures Temper the Print

AXP reported 3Q26 diluted EPS of $5.42 (adj. EPS of $4.68), above consensus of $4.49 and JPMe of $4.45. Provision was the main driver of the beat: provision expense of $985M came in well below JPMe of $1.43B and consensus of $1.33B, including a $211M net reserve release, of which $215M came from the CECL model update. Excluding the CECL benefit, adjusted EPS would have been ~$4.44, roughly in line with JPMe and slightly below consensus. Net revenues of $20.1B rose 9% Y/Y but were modestly below the $20.4B forecast; total billed business was +8% Y/Y to $454.0B, below JPMe of $457.5B. Total expenses of $14.55B were below expectations and the tax rate was 18.1% versus JPMe of 21.9%. AXP raised FY26 GAAP EPS guidance to $18.30-$18.60 ($17.60-17.90 adjusted) and re-affirmed 10% Y/Y revenue growth. We maintain our Overweight rating and raise our Dec 2027 price target to $365 (from $360), applying 15.75x to our 2028 adj. EPS estimate of $23.21, implying ~15.5% potential total return.