Q1 Preview: JPMorgan (JPM) Investors Cautious on Lagging IPO Market

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JPMorgan Chase ( JPM ) shares are strong Thursday heading into the financial giant's first-quarter 2012 performance report, expected out before the market opens Friday.

The Street is currently expecting JPMorgan to produce earnings of $1.12 per share on revenue of $24.37 billion. Those numbers compare with earnings of $1.28 on revs of $25.8 billion in the same period last year.

Shares moved 39 percent higher in the quarter to $45.68 at the end of March, more than making up for the 20 percent drop realized through 2011. The stock is trading at a similar level to its 52-week high, which was hit last April.

JPMorgan kicks quarterly earnings results off for the financials, setting the tone for the rest of the season. Investors are likely to focus on capital ratios, Dodd-Frank compliance, trading revenue, and trends in lending with the report.

In March, JPMorgan was the first bank to announce an increased dividend following Fed stress test results . The firm also approved a new $15 billion common stock buyback program.

Data from Bloomberg shows 34 analysts rate JPMorgan a Buy, six are at Hold, and none are suggesting to Sell. The Street's price target average is $51.50, which ranges from $36 to $58. The Street's average price target hints at 15 percent upside for JPMorgan.

Analyst Comments

  • Barclays said while the dividend and buyback were good news for investors, there will need to be strong capital market action to keep the momentum going. The firm sees challenges in trading, while FICC should rebound and underwriting should have improved.

  • Wells Fargo is looking for EPS of $1.20. The firm noted there might be a crimp on GAAP results from credit spread tightening on JPMorgan's outstanding fair value liabilities.

    M&A completions declined 47 percent in the quarter with a 49 percent drop in announcements, Wells Fargo pointed out. In addition, the firm alluded to a 50 percent drop in fees due to the weaker IPO volumes. Otherwise, Wells Fargo sees trading improvements in the quarter.

  • Deutsche Bank sees EPS of $1.12 in the quarter. The firm said net interest margin ( NIM ) will fall about 6 percent, average loans will improve 0.4 percent, and net interest income ( NII ) will drop 3 percent.

    Revenue should see a solid rebound, lead by acceleration in capital market revs as well as higher mortgage and asset management revs (numbers exclude CVA/DVA). FICC trading revs should be down 10 percent from last year but up 80 percent sequentially. Equity trading will see a 15 percent drop in revs, with investment banking fees down 10 percent.
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out JPMorgan's past performance at Streetinsider's JPMorgan's Income Statement .

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 , Stocks
Referenced Symbols: JPM , NII , NIM

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