American Express soared 9% to nearly $67 on Thursday, in its best day in the market in more than seven years, after its strong quarterly results and upbeat forecast.
The large jump in the shares of AmEx (axp) made it the top contributor to gains in the S&P 500 as well as the Dow for the day.
On Wednesday, AmEx raised its 2016 adjusted earnings forecast and reported better-than-expected third-quarter revenue.
The credit card issuer, which has historically catered to upscale consumers, said it plans to increase spending on digital marketing, a strategy that helped it add 1.7 million new card members in the United States this quarter and expand globally.
The company raised its full-year adjusted earnings forecast to $5.90-$6.00 per share from $5.40-$5.70 and reaffirmed its 2017 forecast, driven by faster than expected progress on its cost cutting initiatives.
Analysts on average had expected the company to earn $5.50 per share in 2016, according to Thomson Reuters I/B/E/S.
AmEx, which cut total costs by about 3% this quarter, wants to save $1 billion by the end of 2017.
“The year-to-date progress gives us greater confidence to substantially increase our investment spending during the remainder of the year and, at the same time, raise our 2016 earnings guidance,” Chief Executive Officer Kenneth Chenault said in a statement.
AmEx said it would renew emphasis on its Platinum cards, typically used by wealthy consumers, and on programs meant for customers outside its traditional base.
The company has “successfully” shifted towards non co-brand card members who produce good returns although they have a slightly higher write-off rate, Chief Financial officer Jeffrey Campbell said on a conference call with analysts.
The company ended a lucrative co-branded contract with Costco Wholesale Corp earlier this year. The portfolio accounted for about 8 percent of the spending on its cards in 2015.
Total revenue, net of interest expense, fell 5 percent to $7.77 billion in the three months ended Sept. 30, beating the average estimate for only the third time in the last two years..
Revenue, net of interest expense, rose 5 percent when Costco-related gains were excluded from the third quarter of 2015.
Net income attributable to common shareholders fell about 10 percent to $1.11 billion in the third quarter.
On a per share basis, AmEx earned $1.20, beating analysts’ average estimate of 97 cents per share on revenue of $7.71 billion.
AmEx shares, which have fallen 13.6 percent this year, were trading at $64.71 in extended trading on Wednesday.