This Holding's Price Drop Shows How Wall Street Isn’t Always Thinking Correctly
Here are the levels we’re watching for a potential next move.
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Even though we are still in the thick of December-quarter earnings with a tilt to retail-facing companies around the corner, the next iteration of investor conference season has begun. That includes an appearance today by American Express AXP at the UBS Financial Services Conference.
You probably noticed AXP shares were trading off today, and it reflects a comment from CFO Christophe Le Caillec that appears to have taken some on Wall Street by surprise.
Le Caillec reiterated Amex’s 2025 guidance calling for top-line growth between 8%-10% and EPS between $15.00-$15.50, up 12%-16% compared to 2024. In doing so, however, he expressed a little surprise at how Wall Street re-jiggered its quarterly expectations. While we too have heard travel-related companies, from airlines to online booking portals, report solid quarterly results and favorable outlooks, Le Caillec reminded the audience there is one less day in the March 2025 quarter compared to last year. The reason? 2024 was a leap year, something we discussed last week when we dissected quarterly results from Amazon AMZN.
Considering the nervous market mood ahead of what looks to be two very big days for the market on Tuesday and Wednesday, we’re not surprised by the dip in AXP. However, the continued job growth and wage gains we saw last week bode well for consumer spending. We will want to continue to monitor the dollar and adjust our expectations for currency headwinds accordingly for Amex but also for Mastercard MA and others.
While today’s dip was notable, it wasn’t enough to warrant springing into action and picking up more AXP shares, especially ahead of what could be two back-to-back volatile days in the market. Relative to the $296-$299 range where we added AXP shares previously, a better pick-up point relative to our $345 price target would be closer to $300, and a very compelling one would be closer to $291.
At the same time, we’ll be following the company closely as it relates to ongoing efforts to refresh its card portfolio. Those efforts, including the new benefits they bring, can drive membership growth and move up the company’s average fee per card.
At the time of publication, TheStreet Pro Portfolio was long AXP.
