Sanjay Sakhrani, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., lowered his earnings estimates for American Express Co., because of a gloomier view of consumer health for the next year and a half.

However, in his note published Tuesday Mr. Sakhrani maintained his "market perform" rating on the company's shares. He cited "compelling" trading valuations for long-term investors.

A day later Scott Valentin, an analyst at Friedman, Billings, Ramsey & Co. Inc., slashed his price target for Amex shares by $6, to $32 a share, but maintained his "underperform" rating.

In a research note, Mr. Valentin cited a range of pressures on Amex: increased credit costs from rapid growth in receivables, particularly in Florida and California; "normal seasonal deterioration and deteriorating consumer financial health"; a drop in "billed business growth" as a result of "slowing retail sales and travel activity"; and "pressure on the discount rate" that merchants pay "as a greater percentage of purchase volume is comprised of lower-margin 'everyday spend' items."

Craig Maurer, an analyst at Credit Agricole Group's Calyon Securities, maintained his "buy" rating and $52 price target on Amex's stock Wednesday, despite June master trust data that showed credit problems "still spreading to longer-tenured accounts" and Amex as a whole.

"We believe the current valuation is simply not a fair representation of the earnings power and stability" of Amex's business model "over the long term," Mr. Maurer wrote in a note.

Mr. Sakhrani wrote that his "baseline assumption calls for an unemployment rate at 6% by the end of 2008, which compares to the 5.5% rate seen in May and June." His forecasts for Amex and Discover also reflect the possibility of "further deterioration in the employment situation into early 2009."

There has been "a deceleration in payment rates since reaching a high of 20% in March 2006" to about 16% now, "perhaps due to consumers no longer having the ability to tap into their home equity lines to assist in paying off their higher interest credit card loans," Mr. Sakhrani wrote.

He lowered his estimates for Amex's earnings by 27 cents for this year, to $3.06 a share, and by 61 cents for next year, to $3.18. The estimates include gains of 33 cents this year and 53 cents next year from antitrust settlements.

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