NEW YORK—A Stifel Nicolaus & Co. analyst cut his rating on American Express Inc. Friday, expecting the credit card issuer to face significantly higher credit costs in 2008 as the economy slows down.
Analyst Chris Brendler lowered his rating to "Hold" from "Buy." American Express was the only credit card company Brendler left at "Buy" when he downgraded the sector two months ago.
Brendler anticipates American Express's recent trend of rising delinquencies will continue into 2008 and the company will have to increase its loss provisions going forward to cover more missed payments.
Brendler cut his 2008 earnings estimate to $3.55 per share from $4.05 per share.
Merrill Lynch analyst Kenneth Bruce also cut American Express, lowering his rating on the company to "Sell" from "Neutral."
American Express shares fell $1.53, or 2.6 percent, to $58 in premarket trading. They closed at $59.53 on Thursday.
