Expenses At American Express Come In Well Below Expectations

American Express CompanyAXP shares are up sharply after posting a solid third quarter that blew away earnings estimates.

The stock is leading the S&P 500 with a 10 percent gain. American Express beat earnings estimates by $0.23, $1.20 vs $0.97 consensus estimate.

A major key for the American Express' solid quarter was that planned expense saves were realized faster than expected, which in turn boosted 2016 EPS guidance.

Increasing competition from JPMorgan Chase & Co.JPM remains American Express' biggest threat.

"We believe rewards competition continues to e one of the biggest risks to AXP, especially after JP Morgan's wildly successful launch of the Chase Sapphire Reserve card," Barclays said in a note.

American Express is working to improve its Platinum cards value, which could weigh on rewards expenses in 2017.

"Given the compelling value Chase gives cardholders for spend on travel and dining, we are concerned that AXP will struggle to sustain its share of high spend transactors," Barclays added.

Barclays maintains an Equal-Weight rating on American Express with a $63.00 price target.