Richard B. Shane, an analyst at Jefferies & Co. Inc., has initiated coverage of American Express Co.'s stock with an "underperform" rating.

"It is our view that higher funding costs and deteriorating credit performance will cause shares to move lower," Mr. Shane wrote in a research note issued Wednesday.

He set a price target of $17 for the New York company's shares.

Amex stock fell 10.5% Wednesday, to close at $20.05 a share. By early afternoon Thursday it had dropped another 13%.

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