American Express Co (NYSE:AXP) stock slid Friday after its third-quarter print failed to impress the Street.

The third-quarter revenue (net of interest expense) grew 8% year-on-year to $16.64 billion, marginally missing the analyst consensus estimate of $16.67 billion. Higher loan volumes, stable growth in Card Member spending, and accelerated card fee revenue growth triggered the topline growth.

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Goldman Sachs analyst Ryan M. Nash reiterated a Buy rating on American Express with a price target of $300.

Goldman Sachs: Nash summarized American Express Co’s third-quarter performance. It reported third-quarter 2024 earnings per share (EPS) of $3.49, surpassing Visible Alpha’s consensus estimate of $3.30. Core pre-provision net revenue (PPNR) exceeded expectations at $4.56 billion compared to the consensus of $4.45 billion, as lower expenses offset slightly weaker revenue.

Core revenue grew 8% year-over-year (FX-adjusted) to $16.64 billion, just shy of the $16.67 billion estimate. Net interest income (NII) rose 16% year-over-year to $4.01 billion, beating expectations of $3.92 billion. In comparison, fees grew 5.8% year-over-year to $12.63 billion, falling short of the $12.75 billion projection due to lower discount revenues. Billed business increased 6% year-over-year (FX-adjusted) to $441 billion, with Goods & Services up 6% and Travel & Entertainment (T&E) slowing to 6%, down from 7% the previous quarter.

Expenses were 1% lower than anticipated, primarily due to reduced variable engagement costs (VECs), as total cardmember costs (including marketing) rose 12% year-over-year to $8.25 billion, below the expected $8.5 billion. Core operating expenses were higher at $3.83 billion compared to the $3.72 billion estimate. Credit performance was in line with expectations, with provisions at $1.36 billion and net charge-offs of 2.1%, which were better than anticipated.

American Express adjusted its full-year 2024 guidance, lowering expected revenue growth to 9% (from the previous 9 – 11% range) and raising its EPS outlook to $13.75 – $14.05, up from the previous $13.30 – $13.80. This increase includes a $0.66 gain from Accertify.

According to Nash, this was a mixed quarter for American Express. Revenues came in slightly below expectations due to weaker discount revenues. However, higher NII and card fees provided some support. Lower-than-expected expenses helped offset higher operating costs.

Credit metrics remained steady, with provisions meeting expectations and losses coming in lower than anticipated. However, the market may be concerned about American Express Co’s revenue mix as NII thrives (16% Y/Y). In comparison, discount revenues increased only 4% Y/Y, raising questions about future growth. The outlook for revenue growth, significantly as NII will likely slow, will likely be a key focus on the upcoming call.