They clearly took one analyst’s bearish new research note to heart.
American Express (AXP -2.19%) stock wasn’t putting any investor on the fast track to wealth on Monday. The market continued to be bearish on the credit card company following its Friday morning release of third-quarter results, and news of a bearish new research note didn’t help. Ultimately, AmEx’s shares closed down by more than 2% on the day, comparing not so favorably to the S&P 500 index’s 0.2% dip.
The bears continued to growl
AmEx’s quarterly performance wasn’t bad at all, with decent year-over-year rises in both revenue and profitability. But with the economy being as frothy as it is, both analysts and investors were expecting more, as the company’s top line came in below the former’s consensus estimate. After all, AmEx’s cardholders tend to be relatively affluent; some market players believe management isn’t doing enough to get them to spend more.
While several analysts bumped up their AmEx stock-price targets Monday in the wake of the earnings report, none were bulls; by my count, of the four pundits making such changes, three maintained their equivalent of hold recommendations, and one kept his sell rating intact.
One of the bears weighing in was BTIG’s Vincent Caintic, who left his price target unchanged while maintaining his sell tag on the stock. In a new research note, Caintic said that AmEx management was to be commended for its honest yet discouraging appraisal that “the U.S. consumer, including the super-prime consumer of American Express, is weakening from a spending and borrowing perspective.”
A mopey market
While there were certainly factors to be concerned about in AmEx’s earnings report, including that implied softness in high-end consumer spending, personally, I would be encouraged by the results. The company continues to expertly service its cardholder base, and it’s no mean feat for a business of this age and size to post meaningful-growth numbers. The current gloom surrounding the stock is overdone, in my view.
American Express is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
