Apple (NASDAQ:AAPL) has enjoyed profound success with its push into the realm of fintech, and its move into the space may be far from over. Despite the potential, Goldman Sachs (NYSE:GS) is ready to step back from its consumer ambitions, perhaps moving responsibilities (which include the Apple Card) over to American Express (NYSE:AXP), at least according to a Wall Street Journal report.
Indeed, any Apple Card shift from Goldman Sachs is not an Apple problem; it’s more to do with Goldman, which has had mixed results with its consumer push.
Undoubtedly, Goldman Sachs is an investment banking behemoth, so moving into the consumer business was a step outside of its circle of competence. Regardless, if American Express picks up where Goldman Sachs left off, I do think the Amex-Apple partnership is one that could yield a lot of fruit for investors of both companies. Deal or not, though, I stand bullish on AXP and AAPL at this juncture.
American Express Would be Wise to Take Over for Goldman
American Express and Apple seem like a match made in heaven. First, both companies tend to cater to the very high end of their industries. Apple has its best-in-class smartphones that tend to lean towards the luxury side of the smartphone market. Meanwhile, American Express caters to affluent clientele with its pricy but perk-rich credit cards. Though Goldman Sachs caters to the very wealthy, as well, it’s not exactly a consumer-facing brand.
In any case, an Amex-Apple deal is uncertain at this juncture. However, if I were at Amex, it’d be a deal too sweet to pass up. Of course, there will be challenges, as Amex will also be stepping slightly outside of its circle of competence. Regardless, Apple brings a massive customer base that could help Amex gain some meaningful ground over its peers in the credit card scene.
Who knows? The Apple Card may be the first of many offerings to come. I certainly would not be surprised if Amex lays the groundwork for Apple to offer the Apple Card Pro or something of the sort!
For now, I wouldn’t get my hopes up for an Amex-Apple deal, as a Wall Street Journal report isn’t to be taken as gospel. However, the move does certainly make sense for Goldman and Amex. Goldman can return to its roots by stepping back from the consumer end, while Amex looks to double down on its ambitions and bring its robust brand with it.
Where Will Apple’s Financial Services Push Take It Next?
Apple’s services push has been a remarkable driver of value for shareholders over the past several years. Indeed, financial services is an area where Apple could expand further. Apple’s savings account and its competitive interest rate is a deal too good to pass up for most.
Looking farther ahead, Apple may be ready to go up toe-to-toe against the banks. With Amex aboard potentially, the firm may be able to expand Apple Pay Later to new countries and ramp up its disruption against other financial institutions.
Is AXP Stock a Buy, According to Analysts?
According to TipRanks’ analyst rating consensus, AXP stock comes in as a Hold. Out of 15 analyst ratings, there are six Buys, six Holds, and three Sell recommendations. The average American Express stock price target is $176.00, implying upside potential of just 1%. Analyst price targets range from a low of $125.00 per share to a high of $205.00 per share.
Is AAPL Stock a Buy, According to Analysts?
Moving onto AAPL, it has a Strong Buy consensus rating based on 24 Buys and seven Hold recommendations. The average Apple stock price target is $193.57, implying upside potential of 2%. Analyst price targets range from a low of $149.00 per share to a high of $240.00 per share.
The Bottom Line on Apple and Amex
An Apple-Amex deal would be a big win for both companies. Regardless, even if no dotted line gets inked anytime soon, I’d look for both companies to keep moving forward with their ambitions.
