Credit card issuer American Express Co's (AXP.N) shares slumped in extended trading on Thursday after the company's 2016 earnings forecast disappointed analysts and investors.
AmEx shares fell about 3.7 percent to $60.35 in extended trading following the company's 2016 earnings forecast of $5.40-$5.70 per share.
Stephen Biggar, an analyst at Argus Research, said while the new guidance for 2016 is above consensus earnings estimates, it includes an expected $1 billion gain on the sale of Costco portfolio, which implies that underlying growth in 2016 will be "weaker than expected, not stronger."
Chief Executive Officer Kenneth Chenault did not specify he size of the expected gain from the Costco portfolio sale during the company's earnings conference call.
Nomura Securities analyst Bill Carcache said some investors stripped about $0.66 a share off the expected earnings per share for the year to account for the gain.
Analysts on an average estimate 2016 earnings of $5.41 per share, according to Thomson Reuters I/B/E/S.
AmEx lost long-term partners such as Fidelity Investments, retailer Costco Wholesale Corp (COST.O) and JetBlue Airways Corp (JBLU.O) last year.
The company also said it would cut $1 billion in costs by the end of 2017 as it responds to intensifying competition in the payments industry.
"Our 2015 results and outlook reflect the reset in co-brand economics, pressures on merchant fees, the evolving regulatory environment and intense competition that have been re-shaping the payments industry," Chenault said in a statement.
Net income attributable to common shareholders fell to $873 million or 89 cents per share, for the quarter ended Dec. 31, from $1.44 billion or $1.39 per share, a year earlier.
The latest quarter included a $335 million after-tax charge and the year-earlier period a $453 million after-tax gain.
AmEx reported its fourth straight decline in total revenue, net of interest expense, of $8.39 billion. Adjusted revenue rose 4 percent.
Shares of the company, which had fallen about 10 percent this year to Thursday close, lost a quarter of their value in 2015.
(Reporting By Sudarshan Varadhan and Arathy S Nair in Bengaluru; Editing by Sriraj Kalluvila and Cynthia Osterman)