JPMorgan Stock Has Soared. Don't Expect It to Keep Going.

The big run in JPMorgan stock is petering out, say analysts at Keefe, Bruyette & Woods.

Analysts say the stock’s valuation is starting to look stretched.

The big run in JPMorgan Chase stock is petering out, say analysts at Keefe, Bruyette & Woods.

Shares in the bank have soared this year, gaining 38% through Monday’s close to $134.41. That’s slightly better than rival Bank of America’s (ticker: BAC) performance, and it surpasses the 25% rise in the S&P 500 over the same time frame.

Brian Kleinhanzl at KBW said he still views JPMorgan Chase (JPM) as best-in-class in terms of quality, but he thinks investors should own stocks where consensus earnings estimates have the potential to rise. He doesn’t think that is the case here.

“Looking ahead, we believe that further upward estimate revisions are needed from here in order for JPM to outperform in the coming year and our estimates are roughly in line with consensus for 2020 earnings per share,” Kleinhanzl said.

Significant earnings growth is already priced in, he said. Without earnings growth that is better than that of its peers, the stock’s valuation seems stretched, he added. JPM stock is trading at 12.6 times KBW’s 2020 estimate—near the high end for the company’s recent history.

Given the outlook, Kleinhanzl downgraded the stock. “We would look to add shares when valuations are more reasonable, and in our view a Market Perform rating is warranted.”

As for consensus expectations, analysts polled by FactSet expect JPMorgan to earn an adjusted $10.66 a share in 2020, up from the $10.31 analysts predict for 2019. That expected 3.4% earnings growth compares to expected 14% growth for 2019 versus 2018.

JPMorgan reports fourth-quarter and 2019 results on Jan. 14.

Write to Lisa Beilfuss at

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

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