AmEx shares fall as 2016 earnings outlook disappoints
By Sudarshan Varadhan
(Reuters) - Credit card issuer American Express Co's (AXP.N: Quote) 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.
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. Continued...