American Express Company (NYSE:AXP) has posted mixed performance this year. Despite touching an all-time high of nearly $200 in February, it has since failed to replicate gains. The stock is currently going lower, taking total losses to more than 11% year-to-date. The performance is still better than a drawdown of almost 21% in the S&P index.
American Express’s lower losses compared to the S&P can be explained by its sector. The company offers payment card services, competing with the likes of Visa and Mastercard. The rivals have also posted lower losses in the year. Whereas tech stocks have been hit by Fed’s policy tightening this year, payment card issuers had a soft landing. These companies have been raising their annual percentage rates. As a result, they can escape additional costs, helping them wither the economic turmoil.
Going forward, American Express is optimistic about higher revenues and earnings. In its first-quarter earnings call, CFO Jeffrey Campbell reaffirmed the FY22 outlook. He cited the recovery from Covid-19 as a key driver of the results. While we believe these fundamentals will boost stock in the coming days, technical indicators point to bearish pressure.
AXP breaks below $155 support
Source – TradingView
Technically, American Express is bearish after breaking below $155 support. An uncertain market outlook could be blamed as investors take profit at the all-time high. We expect the current bear pressure to persist. The stock could fall up to $116, where potential support lies.
Summary
We recommend a sell of American Express based on bearish technical indicators. However, the company’s fundamentals remain robust despite an uncertain outlook. Investors should relinquish the holding for a chance to buy lower.
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