(Reuters) - American Express Co's shares (N:AXP) are on track for their worst day in more than six years as the company's disappointing earnings forecast for the full year raised doubts about the viability of its business model.
AmEx shares plummeted as much as 13.6 percent to $54.15 in midday trading on Friday, a day after the company reported fourth-quarter results and outlook for 2016 and 2017.
Shares came under more pressure after CNBC reported that activist hedge fund ValueAct Capital Management LP was no longer a shareholder in the company.
The company forecast 2016 earnings of $5.40-$5.70 per share, including a gain on the sale of its Costco portfolio, a 10 percent growth at the midpoint. The company also forecast 2017 profit of at least $5.60 per share.
"We expect management's cautious commentary around growing competitive intensity to fuel speculation around the viability of its business model and the degree to which it deserves a premium valuation when its ability to deliver acceptable growth is in question," Nomura analyst Bill Carcache wrote in a note.
AmEx Chief Financial Officer Jeff Campbell said on Thursday that it was difficult to project when the company might return to its consistent 12 percent to 15 percent earnings per share growth range.
Jefferies analyst John Hecht wrote that he expects core earnings of $4.85 per share based on the midpoint of AmEx's 2016 forecast, a 10 percent decline from Jeferries' prior estimate.
AmEx has been facing intense competitive pressure, with the loss of long-term partnerships with Fidelity Investments, retailer Costco Wholesale Corp (O:COST) and JetBlue Airways Corp (O:JBLU) last year hampering growth potential.
AmEx's shares, which have lost about a third of their value since the beginning of 2015 up to Thursday's close, were down 12.3 percent at $54.95 in late afternoon trading on Friday.