) will report its first quarter 2011 earnings on April 13. We
expect the bank to report another solid quarter with total revenues
of about $24 billion. JPMorgan is one the largest and most
diversified banks in the U.S., and competes primarily with other
large players like Bank of America (
), Goldman Sachs (
), Deutsche Bank (
) and Morgan Stanley (MS).
We have a price estimate of
$48.87 for JPMorgan's stock
, about 5% ahead of market price.
JPMorgan has a track record of delivering better than estimated
earnings. Over the past four quarters, JPMorgan reported earnings
per share that have exceeded consensus estimates by 12-15%.
Consensus estimates suggest first quarter 2011 earnings per share
of $1.17, a significant improvement over Q1 2010 earnings of $0.74.
The consensus estimate for Q1 2011 revenue is about $25.8 billion,
representing an 8.5% decline vs. Q1 2010.
What to Watch -
JPMorgan's Global M&A Market Share
In Q1 2011, JPMorgan set a new industry benchmark by
singlehandedly providing $20 billion in financing for AT&T's
acquisition of T-Mobile. Rivals will find it difficult to match
JPMorgan's achievement and regulatory limits on lending will also
create an obstacle for players large enough to extend such large
quantities of capital (like Bank of America and Citigroup). Thus,
JPMorgan should remain well sought after for multi-billion dollar
deals, which should bolster its global M&A market share.
Net Interest Yield on Credit Card Loans
The CARD Act restricts banks on interest rate increases for late
credit card payments. This had an impact on JPMorgan's net interest
yield on credit card loans last year and we expect to see a similar
effect carried forward.
Non-Interest Income as a Percentage of Average
JPMorgan, along with other banks, introduced new fees on
checking accounts after the Dodd-Frank financial reform bill
restricted banks from charging merchants processing fees on debit
card transactions. Essentially, the bank is trying to earn more
revenues from its existing customer base by pushing them to use
more products and services. This will translate into higher
non-interest income, which we represent as a percentage of average
See our full analysis of JPMorgan's stock