Analytical review of American Express Company

9 February, 2016

Analytical review:

The Company ranks 23th on capitalization in the “finance” sector among the Issuers, trading in the American stock market. On 22 January the company reported for Q4 of the fiscal year of 2015. The company has been demonstrating negative dynamics for the last few quarters. Net profit decreased by 38% (from 1.45 billion USD to 890 million USD) in Q4. At the press-conference, company’s executives announced negative guidance of income for 2016. Forecast for EPS is 5.40-5.70 USD. Analysts, in general predict EPS at the level of 5.41 USD. The main reason of the decline in company’s shares is the fact that brend AmEx has been losing popularity over the past years. Business circles do not want to pay high commissions just for cooperation with AmEx. Most of the consumers use mobile service with the lower interest rate to pay their bills. Last year the company lost such important business partners as Fidelity Investments, Costco Wholesale Corp è JetBlue Airways Corp. Currently, competition in the market of payment systems is very high. In order to retain its market share the company plans to reduce costs by 1 billion USD in 2017. Investment companies and banks (Morgan Stanley, RBC Capital, Keefe Bruyette) predict further decline in quotes of the company.

Summary:

As a result of the poor account for Q4 and guidance for 2016, shares of the company fell by 4%. The decline of popularity of the brand AmEx and the loss of important business partners will have a negative impact on the company’s activity. Large investment funds expect that the price of company’s shares will go down. Therefore, in the near future we can expect that downtrend and decline in the company’s quotes will continue.

Trading tips for CFD of American Express Company

Long-term trading: the issuer has made ”gap down” on 22 January as a result of the poor performance stated in the company’s report. We recommend to wait the price reversal and closure of the formation. If the price tests and maintains the level of 62.10 USD, short positions will be advisable. Risk per trade is less than 2% of capital. Stop order can be placed slightly above the signal line. If the positions maintains, we recommend to use “multi-trade”. Take profit can be placed at the levels of 56.00 USD, 52.50 USD and 49.00 USD.

Medium-term trading: âat the moment the issuer is traded in the range of 52.50 – 54.90 USD. After breakdown and testing of these levels and in case of confirmation (for example, pattern Price Action), we recommend to enter the market and open countertrend long positions. Risk per trade of less than 1% of capital. Stop orders can be placed below the signal line. We recommend multi-trade for this position. Take profit can be placed in parts at the levels of50%, 30% and 20%.


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