American Express Earnings Seen Rising -- Earnings Preview

   By Ciara Linnane 
 

American Express Co. (AXP) is scheduled to release third-quarter results after the bell on Wednesday. Here's what you need to know:

EARNINGS FORECAST: The company, which issues payment cards and operates a card-processing network, is expected to report per-share earnings of $1.37, up from $1.25 in the year-earlier period, according to analysts surveyed by FactSet.

REVENUE FORECAST: Revenue is forecast at $8.352 billion, compared with 8.301 billion a year ago. The company is expected to report a continuation of the trends seen in the second quarter, when card-member spending rose 9%, and volumes rose across its domestic and international businesses.

STOCK REACTION: American Express shares are down about 8.8% in the year to date through Monday, and they have fallen 13% since the end of the second quarter. Analysts polled by FactSet have an average overweight rating on the stock and an average price target of $98.33, which is about 19% above its current level.

WHAT TO WATCH:

--ANTITRUST UPDATE: Investors are hoping for an update on the company's antitrust battle with the U.S. government, which says its rules for merchants dampen competition in the payment-card space and lead to higher fees for customers. Amex has consistently said it would suffer a material adverse affect on its business if it loses the case. J.P. Morgan, in a research note, said it was difficult to predict the outcome, but that the stock likely would remain volatile until a decision is handed down.

--OTHER INITIATIVES: Investors also will be keen to hear of any new initiatives to capture customers outside of the company's traditional base, such as its Bluebird prepaid card, which is sold at Wal-Mart stores.

-Ciara Linnane; [e-mail]

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