AmEx shares fall as 2016 earn­ings out­look dis­ap­points

The Pak Banker - - COMPANIES/BOSS -

Credit card is­suer Amer­i­can Ex­press Co's (AXP.N) shares slumped in ex­tended trad­ing on Thurs­day af­ter the com­pany's 2016 earn­ings fore­cast dis­ap­pointed an­a­lysts and in­vestors. AmEx shares fell about 3.7 per­cent to $60.35 in ex­tended trad­ing fol­low­ing the com­pany's 2016 earn­ings fore­cast of $5.40-$5.70 per share.

Stephen Big­gar, an an­a­lyst at Ar­gus Re­search, said while the new guid­ance for 2016 is above con­sen­sus earn­ings es­ti­mates, it in­cludes an ex­pected $1 bil­lion gain on the sale of Costco port­fo­lio, which im­plies that un­der­ly­ing growth in 2016 will be "weaker than ex­pected, not stronger." Chief Ex­ec­u­tive Of­fi­cer Ken­neth Chenault did not spec­ify he size of the ex­pected gain from the Costco port­fo­lio sale dur­ing the com­pany's earn­ings con­fer­ence call.

No­mura Se­cu­ri­ties an­a­lyst Bill Car­cache said some in­vestors stripped about $0.66 a share off the ex­pected earn­ings per share for the year to ac­count for the gain.

An­a­lysts on an av­er­age es­ti­mate 2016 earn­ings of $ 5.41 per share, ac­cord­ing to Thom­son Reuters I/B/E/S. AmEx lost long-term part­ners such as Fi­delity In­vest­ments, re­tailer Costco Whole­sale Corp (COST.O) and JetBlue Air­ways Corp (JBLU.O) last year. The com­pany also said it would cut $1 bil­lion in costs by the end of 2017 as it re­sponds to in­ten­si­fy­ing com­pe­ti­tion in the pay­ments in­dus­try.

"Our 2015 re­sults and out­look re­flect the re­set in co-brand eco­nom­ics, pres­sures on mer­chant fees, the evolv­ing reg­u­la­tory en­vi­ron­ment and in­tense com­pe­ti­tion that have been re-shap­ing the pay­ments in­dus­try," Chenault said in a state­ment.

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