JPMorgan Chase ( JPM ) is one the largest and most diversified banks in the U.S., and offers services such as retail banking, commercial banking, asset management, investment banking, consumer lending and credit cards. Its main competitors include Bank of America ( BAC ), Wells Fargo ( WFC ), Goldman Sachs ( GS ), Deutsche Bank ( DB ) and Morgan Stanley (MS).
We have a price estimate of $48.87 for JPMorgan's stock, roughly 5% above the current market price.
Despite prevailing market headwinds, JPMorgan and other banks are getting a lift from the recovery in the corporate sector. The tech sector in particular has seen surging activity. Last month, Facebook raised $1.5 billion from Goldman Sachs and its clients and LinkedIn is looking to raise about $175 million in an initial public offering. JPMorgan recently raised $1.22 billion from a new fund focused on emerging tech and social media. JPMorgan initially expected to raise between $500 million and $750 million but the fund outperformed due to strong performance of the tech sector.
IPOs on the Rise
As a result of increasing corporate activity, the IPO market in the U.S. is seeing a sharp pickup. In the first two months of 2011, there have been 24 IPOs in the U.S., an increase of 85% over the previous year according to a report by Renaissance Capital. The IPOs raised a total of $8.1 billion this year compared to $1.9 billion last year. The Renaissance report notes that the technology and communications sectors have been most promising and have received a strong reception across a broad range of companies including Demand Media, NeoPhotonics, Epocrates, Velti and InterXion.
Equity Underwriting Volume
JPMorgan's investment banking performance should pick up as key rates rise, spending resumes, and investor confidence recovers. The firm's investment banking division should benefit from a rise in global equity underwriting volumes, bolstered by strength in the technology and communications sectors. After a stagnant equity underwriting market in 2010, we estimate that global equity underwriting volumes will grow 7% annually to reach almost $1371 billion by 2017, from current levels of about $854 billion.