American Express sells off on lower full-year revenue guidance

• AXP stock slips 5% on topline weakness in third quarter.
• Full-year revenue guidance guided down to low end of prior range.
• American Express bested consensus on earnings by $0.20.
• Credit provisions, write-offs rise moderately in Q3.
   

American Express (AXP) stock swooned over 5% on Friday after it reported third-quarter results. The company reduced its outlook for full-year revenue guidance from between 9% and 11% to the lower end of that range, which perturbed market sentiment.

Despite reporting Q3 consensus revenue at consensus on Friday and raising full-year earnings guidance, AXP shares immediately sold off.

The Dow Jones Industrial Average (DJIA), of which American Express is a constituent, has advanced slightly at the time of writing, while the NASDAQ gains 0.76%.

American Express earnings news

Revenue for the credit card issuer rose some 8% YoY in the third quarter as billed business reached $387.3 billion.

“Based on our performance to date and the strong earnings our core business is generating, we are raising our full-year EPS guidance to $13.75 – $14.05 vs $13.28 consensus, up from $13.30 – $13.80 previously,” the New York City based company said.

The higher revenue seen on an annual basis was attributed to growth in loan volumes, higher net interest income, stable customer spending, and accelerated fee growth.

American Express acquired 3.3 million new card users in the quarter and said it saw a major increase in premium credit card customers. Card member loans rose from $118 billion one year ago to $134.5 billion in the recent quarter.

Provision for credit losses increased from $1.23 billion in the year ago quarter to $1.36 billion in Q3. Write-offs rose to 2.2% from 2% one year ago. It was 2.4%, however, in Q2.

American Express stock forecast

AXP stock hit an all-time high just on Thursday. But that was all over Friday when shares dropped starkly at the open. Share initially fell through the topline of a price channel that began back in April. American Express stock originally broke out of that channel in mid-September.

Yet the price action has largely recovered above the trendline, so it make just act as support. In reality, the Q3 results weren’t poor at all, so AXP may consolidate here before finding new buyers.

AXP daily stock chart