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AmEx Climbs as Analysts Praise Plan to Lure Small Merchants

Feb. 10 (Bloomberg) -- American Express Co., the biggest credit-card issuer by purchases, climbed as much as 2.3 percent as analysts recommended buying the stock after the firm forecast a jump in small businesses that accept its products.

AmEx, the third-best performer today in the Dow Jones Industrial Average, climbed 1.3 percent to $88.09 at 1:25 p.m. in New York after touching $88.96 earlier. That compares with a decline of less than 1 percent for the 30-company index. The firm’s shares have gained 43 percent during the past 12 months.

AmEx will allow third-party merchant acquirers to contract directly with small U.S. businesses that have less than $1 million of annual charge volume, the lender said Feb. 5. AmEx now will assign a rate to acquirers, who then will set pricing for merchants. As part of the new program, called OptBlue, AmEx forecast small-merchant acquisitions to increase at least 50 percent annually starting in 2015.

“Our goal is to dramatically accelerate the signing of new merchants coming on to accept American Express over the next couple of years,” AmEx President Ed Gilligan said today during an investor presentation. “This has been an evolution of our strategy.”

Analysts including Morgan Stanley’s Betsy Graseck raised recommendations for the stock after the announcement of OptBlue. New York-based AmEx can win over more small merchants with the program, lifting U.S. acceptance closer to Visa Inc. and MasterCard Inc., Graseck said today in a research note. She rated the stock overweight and increased her 2015 and 2016 earnings estimates.

“Small merchants perceive AmEx as more expensive, more cumbersome with its independent account statements, and slower to pay,” Graseck said in the note. “OptBlue will make it easier for merchants to accept AmEx cards, boosting the company’s wallet share.”

To contact the reporter on this story: Elizabeth Dexheimer in New York at edexheimer@bloomberg.net

To contact the editor responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net

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