This article first appeared on GuruFocus.
American Express (NYSE:AXP) just handed investors a pleasant surprise, beating earnings expectations on the back of a wildly successful Platinum card relaunch. The company reported $421 billion in billed business for the third quarter, topping forecasts of $415.2 billion. CEO Steve Squeri said initial demand for the refreshed Platinum card has doubled pre-launch levels, calling it the strongest start the firm has ever seen. The momentum sent Amex shares up about 4% in early New York trading, extending a 13% rally so far this year.
The company’s premium overhaul came with a higher annual fee$895, up from $695but also a suite of lifestyle perks including $400 in annual dining credits at Resy restaurants. The move positions Amex in a renewed battle for affluent customers, as JPMorgan Chase revamped its Sapphire Reserve card in June and Citigroup followed with its own premium release in July. While total expenses climbed to $13.3 billion, slightly above analysts’ estimates of $13.03 billion, Squeri noted that earnings still grew faster than costs, which were driven by higher customer-engagement spending tied to travel and lifestyle perks.
Riding that momentum, Amex raised the lower end of its full-year guidance, now expecting revenue growth between 9% and 10%, and earnings per share of $15.20 to $15.50. CFO Christophe Le Caillec said new Platinum applicants are coming in with stronger credit profiles, with average scores 15 points higher than before. Squeri added that despite broader market jitters about consumer credit, Amex’s portfolio remains pristine. The combination of record engagement, disciplined execution, and a strong premium base could keep the company on track for sustained earnings growth into next year.
