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 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.
AmEx lost long-term partners such as Fidelity Investments, retailer
Costco Wholesale Corp <COST.O> and JetBlue Airways Corp <JBLU.O>
last year.
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.
"Our 2015 results and outlook reflect the reset in co-brand
economics, pressures on merchant fees, the evolving regulatory
environment and intense competition that have been re-shaping the
payments industry," Chenault said in a statement.
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Net income attributable to common shareholders fell to $873 million
or 89 cents per share, for the quarter ended Dec. 31, from $1.44
billion or $1.39 per share, a year earlier.
The latest quarter included a $335 million after-tax charge and the
year-earlier period a $453 million after-tax gain.
AmEx reported its fourth straight decline in total revenue, net of
interest expense, of $8.39 billion. Adjusted revenue rose 4 percent.
Shares of the company, which had fallen about 10 percent this year
to Thursday close, lost a quarter of their value in 2015.
(Reporting By Sudarshan Varadhan and Arathy S Nair in Bengaluru;
Editing
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