American Express Price Target Could Change After New Platform Reveal

American Express (AXP) is moving into the digital ad space, joining the ranks of Netflix (NFLX) , Amazon (AMZN) , Apple (AAPL) and others.

Following a pilot program earlier this year with Marriott (MAR) and Tumi, on Monday morning Amex announced that unveiled Amex Ads, its new digital advertising platform designed to help brands connect with American Express’s 34 million U.S. Consumer Card Members. The program leverages insights generated by American Express’ extensive first-party data, gleaned from a 360-degree view of online and offline Card Member spend. Knowing what the membership is spending on should allow for smartly targeted and on-point advertising, is our thinking. Moreover, given the favorable demographics for those members, winning companies that want to advertise to them should not be a hard task.

We see this as a smart move for Amex as it taps into another aspect of its membership business model. If the company is successful, and we think it will be, it will be another element that reduces the influence of transaction-related revenue on its overall profit and EPS stream. We expect to hear more about this when Amex reports its September quarter results on October 17, and as it makes progress on this front, we’ll revisit our $370 target as needed. Another factor that would lead us to revisit that target is one we’ve discussed before, but to jog some memories out there, it’s the impact of the new Platinum card refresh on cards in force and average fee per card.

Could there be other companies that make a similar move to the one Amex is making?

Certainly possible, especially as advertisers continue to look for new ways to reach consumers. One potential candidate is former Portfolio holding Clear Secure (YOU) and its membership business model. If Clear Secure ventured down this path, we think Amex not only has far more data, but far higher quality data that would attract a wider array of advertisers.

If you’re thinking Amex’s move only speaks to more advertising dollars moving away from traditional media, we are right there with you. It also means an incrementally tougher competitive landscape for the likes of Trade Desk (TTD) , which is already dealing with Netflix, Amazon and other video streaming companies flexing their advertising models.

As it relates to TTD shares, more Wall Street firms have been downgrading their price targets of late, with BofA now at $49, down from $55; Guggenheim at $55 from $75; and Wells Fargo down to $53 from $68. We’d note these price target adjustments were made before Monday's news by Amex.

More Pro Portfolio

At the time of publication, TheStreet Pro Portfolio was long AXP, AMZN and AAPL.