By Senad Karaahmetovic
Shares of American Express (NYSE:AXP) are trading 4% higher in pre-open Friday after the financial company raised its full-year revenue outlook.
AXP delivered a “big” Q2 beat, according to a Goldman Sachs analyst. American Express reported an EPS of $2.57 on revenue of $13.40 billion to easily top the expected EPS of $2.39 on revenue of $12.51 billion.
The company raised its full-year revenue outlook to +23% to +25% from the prior +18% to +20%. The full-year EPS guidance that calls for $9.25 to $9.65 is maintained.
“We added 3.2 million new proprietary cards in the quarter, driven by continued strong demand for our premium products,” CEO Steve Squeri said in a statement.
On the other hand, “customer engagement costs increased, primarily driven by a 25 percent increase in network volumes and higher usage of travel-related benefits,” while operating expenses “also increased,” the company added.
The analyst weighed in positively on the results as AXP delivered “big top-line beat” and “solid” overall results. However, he says some investors may be disappointed that the 2022 EPS guidance is only reiterated given a big Q2 beat.
This “implies the rest of the year is lower (~$4.35 at high-end vs. street at $4.65),” he told clients in a note.
“Our pushback would be that given QTD stock performance we think the better revenues are the key driver and while the expenses missed by more than expected, much of it can be explained by the variable nature of its expense base. So when we put it all together, shares are down almost 20% the past 3 months on macro concerns, and we believe that the better than expected top-line results and the improved guidance will push shares higher today,” the analyst added.