American Express Co. shares fell Friday after a Barclays analyst lowered his rating on the credit card company's stock.
THE SPARK: Analyst Mark DeVries lowered his rating on American Express from "Overweight" to "Equal Weight," saying the company has more modest growth potential.
THE BIG PICTURE: American Express tends to cater to more affluent customers, which is one reason it has done well during the economy's slow rise out of the recession. But the analyst points out that its growth appears to be more modest these days.
The company reported in April that its net income edged up 2 percent in the first quarter, as increased spending by cardholders helped boost revenue for the credit card issuer. While it earnings came ahead of Wall Street expectations, revenue fell short.
American Express saw it as a strong start to 2013, pointing to its ability to increase revenue in a slow growth economy, control expenses and maintain a strong balance sheet.
THE ANALYSIS: DeVries said that American Express has far outperformed the market since bottoming in 2009.
While some of those gains were justified, he feels its growth potential more modest now because of slower revenue growth. He also said that he expects the billing side of the company's business, versus revenue from fees, may be more modest than some investors expect.
The analyst, however, raised his price target on the stock to $82 from $72.
SHARE ACTION: Shares fell $1.89, a more than 2 percent drop, to $73.32 by early afternoon, outpacing broader market declines. Its shares are up nearly 37 percent since this time last year, based on Thursday's close. Shares remained at the top end of the company's 52-week trading range of $53.02 to $78.61.