Updated from 11:24 a.m. EST
guided Wall Street's fourth-quarter estimates lower Wednesday, citing the flood of personal insolvencies that preceded last month's enactment of a new bankruptcy law.
Speaking at an investors' conference, CEO Ken Chenault said analysts who are forecasting 25% growth in continuing-operations EPS are "far too aggressive" and out of whack with the company's long-term target of 12% to 15%.
The current Thomson First Call consensus earnings estimate for American Express' fourth quarter is 68 cents a share.
Chenault predicted that charge-offs in American Express' consumer and small-business portfolio will be as much as $200 million higher than they were in the third quarter, due to the new bankruptcy law.
"Unlike a number of our peers, part of this variance is strictly due to positive volume increases -- in our case, our 15% growth in balances through September. The remainder, however, is clearly driven by the new legislation," Chenault said.
Shares fell $2.40, or 4.7%, to $48.53 following the news.
Chenault gave two other reasons that analyst estimates are too high. One has to do with the spinoff of the company's financial advisory unit into
. Chenault noted that pro forma adjustments made in connection with the spinoff result in year-ago earnings from continuing operations that are lower than many analysts seem to understand.
"This situation directly impacts a number of EPS growth rate projections and should be re-evaluated," he said.
Chenault also said many analysts seem to mistakenly believe the company plans to moderate its spending on marketing and promotion.
"As we reported in our 10-Q, based on our assessment of competitive opportunities and the success of recent marketing initiatives, we expect our fourth quarter growth in marketing, promotion, reward and cardmember services to be generally consistent with the 16% growth we reported in the third quarter," he said.