Another good day for crude oil prices gave traders another reason to be buyers, as the bounce in oil suggests the economy may be on firmer footing than recently assumed. Crude was up more than 8%, sending the S&P 500 higher by 2%, to a close of 1,906.9.
Not every stock had a banner day, however. American Express Company (NYSE:AXP), Cardiovascular Systems Inc. (NASDAQ:CSII) and Freeport-McMoRan Inc (NYSE:FCX) each ended the trading week pointed in the wrong direction. Here’s what investors need to know.
American Express Company (AXP)
The good news is American Express Company managed to beat its fourth-quarter estimates … at least in terms of earnings. The bad news is, the charge card company offered up some guidance that was lackluster.
Last quarter, American Express earned $1.23 per share on revenue of $8.4 billion. The bottom line was better than the anticipated $1.13 per share of AXP, and revenue was in line with analysts’ outlooks. All the same, Q4 profits were down 38% on a year-over-year basis, while sales were off nearly 8%.
The market was more or less prepared for that setback, but AXP shareholders were caught off guard by a 2017 EPS outlook that suggests it foresees slow earnings growth. Though the current year’s profit should roll in between $5.40 and $5.70 per share (versus estimates of $5.40), American Express Company told investors it was starting 2017’s outlook with the lower end of the range at $5.60.
That was enough to prompt a wave of downgrades and target-price cuts for AXP, the most noteworthy of which came from Credit Suisse, which lowered its target price from $71 to $66, maintaining its “underperform” rating.
AXP ended the day down 12%.
Freeport-McMoRan Inc. (FCX)
Freeport-McMoRan shares may have rallied earlier in the week with commodity prices, but FCX shareholders were forced to face a reality about the company today — Tuesday’s pre-open earnings announcement could just be the beginning of a wave of headaches.
BB&T analyst Garrett S. Nelson may have summed it up best by saying, “The continued drop in copper and oil prices increases the likelihood that Freeport-McMoRan will have to resort to additional capex cuts or asset sales.”
Which of those outcomes, or combinations of those outcomes, is in the cards isn’t yet clear. None of them, however, are a step in the right direction for FCX owners. And even if commodities should recover soon, it’s going to be a while before they’re at a level that makes Freeport-McMoRan consistently profitable.
FCX closed 9% lower.
Cardiovascular Systems Inc. (CSII)
Finally, Cardiovascular Systems lost 30% of its value on Friday after reporting second-quarter earnings that were worse than expected and posting revenue that fell short of estimates. The maker of heart-related medical equipment lost 47 cents per share on revenue of $41.4 million. Analysts were calling for a loss of only 38 cents per share and sales of $46.2 million.
The current quarter’s results aren’t going to be any more encouraging. The company is looking for sales between $40.5 million and $42 million, versus estimates of $48 million.
The numbers were enough to prompt a downgrade from Needham … a wide swing from a “buy” rating to an “underperform” rating.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.