This morning, Merrill Lynch cut the shares of Dow component American Express from buy to neutral, citing recent disruptions in the financial market and a potential slowdown in consumer spending. In a note, the broker said it's adjusting its view on AXP due to concerns that weak U.S. employment could undermine the company's otherwise strong growth prospects... Specifically, weaker U.S. payrolls could reduce consumer spending.
Merrill Lynch also cut its 2008 profit forecast for the firm from $3.96 to $3.85, and downwardly revised its 2009 guidance from $4.43 from $4.20. The broker said the shares are likely to remain range-bound until more concrete data emerges to reveal the current state of the U.S. economy.
Currently, AXP is down nearly 4% on the news. The blue-chip financial has lately dropped under pressure from its 10-week moving average, which took a steep downturn toward the end of July. Unfortunately for the stock, it's vulnerable to more future downgrades no less than 9 analysts maintain a strong buy rating on AXP, along with 2 buys and just 3 holds.