Balanced View on JPMorgan - Analyst Blog


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On May 28, 2013, we maintained our long-term recommendation on JPMorgan Chase & Co. ( JPM ) at Neutral. The reiteration was based on the company's strong first-quarter results, which significantly surpassed the Zacks Consensus Estimate.

Why Neutral?

JPMorgan's first-quarter earnings came in at $1.59 per share, substantially beating the Zacks Consensus Estimate of $1.37. Better-than-expected results were primarily driven by a fall in operating expenses and provision for credit losses, partially offset by lower-than-expected net revenue.

Following the first-quarter results, 19 of the 21 estimates for 2013 have been revised upward, raising the Zacks Consensus Estimate 4.8% to $5.69 per share. Likewise, for 2014, 14 of the 20 estimates moved north, thereby making the Zacks Consensus Estimate advance 3.3% to $5.98 per share. With the Zacks Consensus Estimate increasing for both 2013 and 2014, the company now has a Zacks Rank #2 (Buy).

The key reason behind JPMorgan's stable earnings amid the ongoing sluggish economic recovery is its business diversification. Moreover, the company is an asset for yield-seeking investors due to its price appreciation and steady capital deployment activities.

However, JPMorgan's top-line growth is expected to slacken in the next few quarters, owing to weak trading revenues and net interest margin contraction. Moreover, with the thrust of new banking regulations, there will be a pressure on fees and loan growth is likely to remain weak.

Other Banks Worth Considering

While we prefer JPMorgan, other well performing banks include The Goldman Sachs Group, Inc. ( GS ), Zions Bancorp. ( ZION ) and State Street Corporation ( STT ). All these banks carry the same Zacks Rank as the former bank.

GOLDMAN SACHS (GS): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

STATE ST CORP (STT): Free Stock Analysis Report

ZIONS BANCORP (ZION): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: GS , JPM , STT , ZION

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