Earnings Beat Has This Dow Stock On Track For Best Week In Years

Higher customer spending led to upbeat quarterly numbers for AXP

Managing Editor
Apr 19, 2018 at 9:52 AM
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American Express (NYSE:AXP) stock is up 6.6% to trade at $101.44, the top Dow stock out of the gate, after the blue chip reported first-quarter earnings and revenue that surpassed analyst expectations. The company attributed the upbeat numbers to a record high investment in credit-card rewards and a healthy economy that spurred higher customer spending. In response, five brokerage firms chimed in with price-target hikes for AXP shares, including Barclays to $113. 

American Express stock is now trading back above its year-to-date breakeven, and within striking distance of its record high of $102.38, tagged on Jan. 16. The security is currently on track for its best week since October 2016, and has added 33% in the last 12 months. 

Despite the equity's solid uptrend and the analyst attention today, there is still room for more upgrades that could push the stock higher. Of the 20 brokerages covering AXP, 60% rate it a tepid "hold." 

In the options pits, calls were all the rage ahead of AXP earnings. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 1.68. Not only does this show that bought AXP calls have nearly doubled puts, but the reading ranks 3 percentage points from a 52-week high. 

Digging deeper, the May 95 call saw the largest increase in open interest during this time frame. The majority of the activity at this strike was of the buy-to-open variety, indicating options traders have been banking on a continued uptrend from the Dow stock in the coming weeks. Those buyers likely aren't disappointed today, with the calls now comfortably in the money.

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