Are American Express (AXP) Shares Oversold Following Disappointing Guidance?


Shares of American Express Company (NYSE:AXP) are in a free fall this morning after the company reported better than expected earnings, but guided lower than analysts had predicted for 2017. The stock is down over 10% and shares have hit a new 52-week low after the company said that their 2017 earnings would be around $5.60 per share. This fell well short of the $7.99 a share that analysts had predicted.

The lower long term guidance forced several firms to cut their rating on shares of American Express Company (NYSE:AXP), leading to an even bigger selloff. With that said, RSI on the stock is now at 16.5, indicating that it may be oversold. With a PE ratio of around 10 over the next 2 years, according to the company’s guidance, the stock may in fact be oversold, especially considering the fact that the stock was trading as high as $77 three months ago.

The stock is down 10.42% or $6.53 following the news, hitting $56.11 per share. About 15.94M shares traded hands or 120.17% up from the average. AXP has declined 22.01% since June 17, 2015 and is downtrending. It has underperformed the S&P500 by 13.14%.

From a total of 14 analysts covering American Express Company (NYSE:AXP) stock, 3 rate it a “Buy”, 2 a “Sell”, and 9 a “Hold”. This means that 21% of the ratings are positive. The highest target price is $95 while the lowest target price is $67. The mean of all analyst targets is $78.28 which is 39.51% above today’s ($56.11) stock price. American Express Company was the topic of 22 analyst reports since July 23, 2015 according to the firm StockzIntelligence Inc. DA Davidson initiated shares on January 13 with a “Neutral” rating. UBS downgraded shares to a”Sell” rating and a $67 target share price in their report from an October 26. JMP Securities initiated AXP stock in a recent report from December 22 with a “Market Perform” rating. Barclays Capital maintained the rating on October 13. Barclays Capital has a “Equal-Weight” rating and a $77 price target on shares. Finally, Topeka Capital Markets initiated the stock with a “Hold” rating in a report they issued on a November 9.

The institutional sentiment decreased to 0.84 in Q2 2015. It’s down 0.06, from 0.9 in 2015Q2. The ratio turned negative, as 74 funds sold all their American Express Company shares they owned while 508 reduced their positions. 82 funds bought stakes while 407 increased their total positions. Institutions now own 807.72 million shares which is 0.65% more than the previous share count of 802.47 million in 2015Q2.

Davis Capital Partners Llc holds 9.69% of its total portfolio in American Express Company, equating to 651,000 shares. Berkshire Hathaway Inc owns 151.61 million shares representing 8.82% of their total US portfolio. Moreover, Rk Asset Management Llc has 6.35% of their total portfolio invested in the company, equating to 98,225 shares. The California-based Focused Investors Llc has a total of 6.27% of their portfolio invested in the stock. Veritas Asset Management Llp, a United Kingdom-based fund reported 6.29 million shares owned.

Since May 4, 2015, the stock had 0 buys, and 1 sale for a total of $16.68 million in net activity. Squeri Stephen J sold 219,474 shares worth $16.68M. Sample Neal J. sold 4,317 shares worth $348,563. Chenault Kenneth I sold 769,000 shares worth $61.58M. Williams Anre D sold 34,606 shares worth $2.68 million.

American Express Company is a global services company. The company has a market cap of $55.23 billion. The Company’s principal services and products are charge and credit payment card products, and travel-related services offered to clients and businesses around the world. It has 10.14 P/E ratio. The Company’s divisions include U.S.