J.P. Morgan Discusses Credit Card Names (AXP, COF)

J.P. Morgan Chase & Co. is out with a research note on credit card names, such as American Express AXP and Capital One Financial COF. It has a Overweight rating and a $52 price target on American Express, and a Neutral rating and a $52 price target on shares. In a note to investors, J.P. Morgan writes, "Overall, our outlook remains favorable for net charge-offs over the next six months. However, seasonality could lead to fluctuating results over the near term. Our dataset indicates that charge-off rates for the large credit card issuers increased sequentially by an average of 15-16bps in March over the last nine years. NCOs typically experience seasonal pressure in February through May as delinquencies from the fourth quarter exit the loss cycle. Total DQs in our trust index have improved sequentially over the past 15 months (since Nov. 2009), and we believe the downward trend should continue in March. Finally, card issuers experience significant paydown activity related to tax refunds during February through May. In addition, although we remain focused on the effects from higher consumer prices, we do not believe March credit data or account growth will suggest any material impact."