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The stock, a component of the Dow industrials, slumped 2.9% to $38.09, after being up as much as 2% at a high of $40 earlier in the session.
Lehman Analyst Bruce Harting lowered his 2008 earnings forecast to $3.30 a share from $3.35 and his 2009 estimate to $3.50 to $3.55 a share. He also cut his price target on the stock to $50 from $55, while reiterated his equal weight rating.
Harting said that above-average loan growth over the last few years and with the distribution of charge cards being heavily weighted on a relative basis toward geographic areas with the greatest home price depreciation, will likely lead to "faster increases in charge-offs throughout the next year."
The stock has now lost 18% since the end of May, and 27% since the end of 2007.
Not all Wall Street analysts were so negative on American Express. Fox-Pitt Kelton Analyst Howard Shapiro initiated coverage of AmEx with an outperform rating and $55 stock price target, saying the stock has been "unjustly punished." He feels the company has "meaningful competitive advantages" that make AmEx attractive over the long term.
"Without a direct [comparison], we believe many investors are confused over how to properly value American Express shares," Shapiro said in a research note. "Although we acknowledge that there may be continued volatility (and a lower share price) in the near term, we have high conviction that AmEx shares represent an attractive long-term investment and view the current risk/reward profile as compelling." Tomi Kilgore tk1
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