American Express (NYSE:AXP) impressed investors with its Q1 2024 earnings report released on April 19th. The company showcased robust growth, with revenue climbing 11% to $15.8 billion and earnings per share (EPS) surging 39% to $3.33, surpassing expectations.
Key drivers of this performance included higher net interest income and increased Card Member spending. Despite a rise in consolidated provisions for credit losses to $1.3 billion, compared to $1.1 billion a year ago, American Express remained on solid footing.
Management’s reaffirmation of their full-year 2024 guidance, projecting revenue growth of 9-11% and EPS of $12.65 to $13.15, further bolstered confidence. Noteworthy highlights from the quarter included strong growth in International Card Services, a 17% increase in loans, and a significant uptick in spending among Millennial and Gen-Z demographics.
Investors reacted positively, with the stock jumping over 5.5% following the announcement. Since the earnings release the stock has appreciated by close to 10%, but can this rally continue?
The star performerDespite facing competition from numerous payment processing companies and fintech startups, American Express has continued to remain one of the best-performing financial services companies in the world.
During the financial crisis of 2009, the stock fell from above $60 to below $10, but then it started a bull run that generated more than 2,400% in return for investors as it currently trades close to $240. That bull run remains intact to date.
Like most stocks, AXP also crashed during the bear market that started post-COVID-19 pandemic, but it recovered quickly and made an all-time high near $200 in February 2022. After that, the stock entered a minor downtrend, which lasted for more than 18 months but ended last year in October.
The long-term charts suggest that the stock is going to maintain its upward journey going forward. So, investors who have been holding on to the stock for a long time can continue doing so without any worry.
Short-term momentum may push to $250When we look at AXP’s short-term 4-hour chart, an even more aggressive bullish momentum becomes evident. Since the start of November last year, the stock has generated more than 50% returns going from a low near $140 to a high above $240.
At the start of this month, going into the earnings, the stock did face some headwinds above $225, but post Q1 earnings those seem to have gone. Short-term momentum indicators that had turned negative have turned positive or are on the verge of turning positive.
At this juncture, it appears that AXP can breach the coveted $250 mark easily. Hence, traders who are bullish on the stock in the short term can buy it with a stop-loss below the $215 support. Traders with bearish sentiment must wait for the stock to fall below $215 before initiating any short positions. Falling below $215, the next support for AXP can only be found near $178.
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