American Express is getting crushed.
In morning trading on Friday, the stock fell by nearly 5% to as low as $US76.92 a share, a level it hasn’t reached since July 2013.
American Express was the worst performer on the Dow on Friday.
The credit card and payments giant reported first quarter earnings Thursday that showed revenues missed forecasts and fell 3% to $US7.95 billion. The company blamed this partly on the strong dollar.
Earnings per share however beat expectations, at $US1.48 (versus $US1.37 forecast.)
The stock is down by more than 12% year-to-date and over 5% over the past 12 months. It tumbled after American Express announced in February that its exclusive co-branding agreement with Costco will end next March.
During the earnings call Thursday, CEO Kenneth Chenault said the company plans to invest heavily in keeping its Costco customers.
“The incremental spending in 2015 will focus on the many growth opportunities that we see across all segments in our company including our efforts to capture a meaningful portion of the spend and lend of our Costco card members in the US,” Chenault said.
In a note Friday, Barclays analysts maintained their $US85 price target and “Underweight” rating, but lowered profit forecasts.
“On the call, management reiterated their guidance for flat to down y/y 2015 EPS despite 1Q EPS growing 11% on a year/year basis,” Barclays analyst Mark DeVries wrote.
“As such, we reduce our EPS forecasts for the remainder of the year on the higher opex and provisions, slower billed business growth, and the payment of preferred dividends ($US20mm per quarter) due to begin in 2Q15.”
Here’s a chart showing the plunge in trading:
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