Shares of American Express Co. slumped Friday, after a positive earnings report and confirmation of its full-year outlook wasn’t quite good enough for the recent rally to record highs to resume.
The decline was enough to make the stock the biggest loser within the SPDR Financial Select Sector exchange-traded fund XLF, -0.07% and among Dow Jones Industrial Average DJIA, +0.03% components. The fall ends a week that started with Monday’s record close of $128.57, which capped a 5-session streak of record closes.
AmEx reported before the open second-quarter net income that rose to $1.76 billion, or $2.07 a share, from $1.62 billion, or $1.84 a share, in the year-ago period, to beat the FactSet consensus for earnings of $2.03 a share. Revenue increased 8% to $10.84 billion, just above the FactSet consensus of $10.83 billion, as the consumer services business showed the fastest growth.
The company also affirmed its 2019 financial guidance ranges, of adjusted earnings per share of $7.85 to $8.35 and revenue growth of 8% to 10%.
Then on the post-earnings conference call with analysts, Chief Financial Officer Jeff Campbell indicated that the 2019 EPS outlook was actually increased slightly. In March, the company said EPS would be at the “lower end” of the guidance range.
“Given where we are today, I will expect our full-year EPS results to be more in line with the middle part of our original guidance range,” Campbell said, according to a transcript provided by FactSet.
Jefferies analyst John Hecht followed the results and conference call by keeping his rating at hold and his stock price target at $130, which is about 4% above current levels, saying he believes the EPS outlook was “conservative,” and may disappoint investors.
“While we view the quarter as being generally positive, management’s expectation that full-year results will likely be closer to the mid-point of the re-affirmed guidance range will likely dampen enthusiasm,” Hecht wrote in a note to clients.
Leading up to AmEx’s results, the stock had been on a tear, along with its payments peers, as consumer confidence remained robust despite increasing concerns that the overall economy may be slowing down.
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