Remember all those math problems about two trains going in opposite directions?
Well, forget about them.
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Chris Versace, who oversees TheStreet Pro's portfolio, is making some real moves with credit card giant American Express (AXP) and big-box warehouse club operator Costco (COST) .
The veteran fund manager said that after a more than 35% gain, which has pushed the shares past his $310 price target, he is downgrading the stock to a Two rating from One.
"We will remain owners of AXP shares, looking to tap into what is expected to be Amex's biggest overhaul for its Platinum cards," he said. "In the past, such moves have expanded the array of benefits offered to members, but they have also included a membership price hike."
"Those aggregate benefits defray the membership price tag, and we expect that will remain the case," Versace added.
American Express, which is scheduled to report second-quarter earnings on July 18, said it is refreshing both the personal and business versions of the Platinum Card later this year, which the company called its largest investment ever in a card refresh.
Fund manager notes Platinum Card refresh
"Platinum Card benefits and services resonate across generations, particularly with Millennial and Gen Z who accounted for 35% of total U.S. Consumer spending last quarter," Howard Grosfield, group president of U.S. Consumer Services, said in a statement.
Versace said he continues to favor the company's membership business model given the large impact on Amex's profits and bottom-line earnings.
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"As we learn more about this forthcoming upgrade, we suspect a price target increase will be in the cards, and odds are we won't be the only ones," he said.
Bank of America Securities said that it was "increasingly encouraged" on the efficacy of an Amex Platinum refresh following a survey of credit card holders
The survey found that out of all brands surveyed, American Express cardholders were the least likely to cancel their card and the most likely to keep the card even if the benefits did not change.
BofA believes a Platinum card refresh could increase net card fee revenues by 7%.
The firm also noted that American Express recently passed the Federal Reserve Board's 2025 Dodd-Frank Supervisory Stress Test (DFAST), an annual exercise conducted by the Federal Reserve Board to assess the financial health of large US banks.
"Under the severely adverse scenario, which assumes an unemployment rate of 10%, American Express still produces positive earnings before taxes over the stress test period," said BofA, which maintained its buy rating on American Express shares.
American Express shares are up 7.3% since January, while the stock has surged nearly 38% from a year ago.
Image source: Bloomberg/Getty Images
Costco expanding footprint, fund manager says
Turning to Costco, Versace said that he would use the recent retrenchment in Costco from their early June highs to upgrade the shares to a One rating from Two.
"While our price target on the shares remains $1,200, we continue to see Costco nabbing consumer wallet share as consumers tap its warehouse offerings and the company continues to expand its footprint," he said.
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Moving into the second half of 2025, Versace said the company's high-margin membership fee revenue stream should see a more pronounced impact from its September price hike.
Costco increased its annual membership fees for the first time in seven years, effective Sept. 1, boosting the Gold Star individual and business membership fee from $60 to $65. The executive membership fee increased from $120 to $130.
The company's shares are up 7.75% this year, and the stock is up 16.1% from 2024.
Costco's comparable sales have been exceptionally strong, but the pace may start to moderate as major tailwinds from the past year begin to cycle, Wells Fargo analyst Edward Kelly said on June 24, according to The Fly.
Gold and gift card sales alone may have contributed over 100 basis points to U.S. comps, though several other factors are also at play, Kelly said. Wells has an equal weight rating and $1,000 price target on Costco shares.
Costco Wholesale reported net sales of $20.97 billion for the retail month of May, the four weeks ended June 1, an increase of 6.8% from last year. Net sales for the first 39 weeks were $201.02 billion, up 8% from billion last year.
"The next known catalyst for COST shares will be the company's June sales results on July 9," Versace said.
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This story was originally published June 30, 2025 at 4:06 PM