American Express (NYSE:AXP) Boosted on Higher Net Interest Income Outlook

Even with a preannouncement of higher expenses, FBR believes American Express (NYSE:AXP) will generate improved earnings on an increasing net interest income.

FBR says, "We are increasing our FY11 EPS estimate to $3.70 from $3.65 and increasing our FY12 EPS estimate to $3.85 from $3.70 based on our expectations for improved net interest income (primarily higher loan balances) and lower provision expense, which we expect to be offset by upward trending operating expenses led by marketing and reward expense as management continues to reinvest "excess" profitability into the business. Our FY12 EPS estimate also assumes higher net interest income, again driven by higher projected loan balances, while provision expense is revised lower reflecting projected stronger credit performance."

FBR Capital maintains a "Market Perform" rating on American Express (AXP), which closed Tuesday at $44.80, losing $0.99, or 2.16 percent. FBR has a price target on American Express of $50, raising it from from $45.