Amex CEO Says Consumers Still Spending Freely: So Why Is the Stock Sliding?

American Express Co AXP reported fiscal first-quarter 2025 results on Thursday. The stock price declined after the report.

The company reported revenue (net of interest expense) growth of 7% year-on-year to $16.97 billion, topping the analyst consensus estimate of $16.94 billion. 

The revenue increase was primarily driven by strong Card Member spending, higher net interest income supported by growth in revolving loan balances, and accelerated card fee growth.

GAAP EPS of $3.64 topped the analyst consensus estimate of $3.47. 

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Card Member spending or Billed Business grew 6% Y/Y to $387.4 billion. U.S. Consumer Services revenue was $8.25 billion, up 7% Y/Y. Commercial Services revenue was $4.04 billion, up 2% Y/Y.

International Card Services revenue was $2.94 billion, up 13% year over year, and Global Merchant and Network Services revenue was $1.82 billion, down 2.9% year over year.

Total expenses increased by 10% Y/Y to $12.5 billion, primarily reflecting higher variable customer engagement costs. 

Provision for credit losses stood at $1.2 billion, compared with $1.3 billion a year ago, reflecting a modest net reserve build. 

FY25 Outlook: Amex reiterated a revenue outlook of $71.22 billion-$72.54 billion (up by 8%-10% Y/Y) versus a consensus of $71.34 billion subject to the macroeconomic environment. It reaffirmed EPS of $15.00–$15.50 versus the consensus of $15.25.

"Based on the steady spend and credit trends we have seen to date and the current economic outlook, we are maintaining our full-year guidance for revenue growth of 8 to 10 percent and EPS of $15.00 to $15.50, in line with the ranges we provided in January, subject to the macroeconomic environment," Chairman and CEO Stephen J. Squeri said.

Last week, BofA Securities analyst Mihir Bhatia upgraded American Express from Neutral to Buy and lowered the price target from $325 to $274 citing its high-quality customer base should drive more durable earnings while keeping credit losses in check. Bhatia noted the current downtick offers long-term oriented investors an opportunity to buy a high-quality company at a reasonable valuation.

The analyst predicts that higher-income consumers, who comprise American Express' customer base, will prove to be more resilient from a credit and spending perspective. Amex stock is down over 15% year-to-date.

Price Action: AXP stock is down 0.76% at $250.99 premarket at the last check on Thursday.

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