JPMorgan Remains Neutral - Analyst Blog
March 06 2013 - 1:25PM
Zacks
On Mar 4, 2013, we reiterated our long-term recommendation on
JPMorgan Chase & Co. (JPM) at Neutral. This
reflects the company’s strong fourth-quarter results, which
significantly surpassed the Zacks Consensus Estimate.
Why Neutral?
JPMorgan’s fourth-quarter earnings came in at $1.39 per share,
significantly surpassing the Zacks Consensus Estimate of $1.20.
Better-than-expected results were primarily driven by improved
revenues and a slowdown in provision for credit losses, marginally
offset by higher non-interest expenses.
Following the fourth-quarter results, the Zacks Consensus Estimate
for 2013 has gone up 2.1% to $5.41 per share. Likewise, the Zacks
Consensus Estimate for 2014 has also advanced (up 2.7% to $5.78 per
share). With the Zacks Consensus Estimates for both 2013 and 2014
increasing, the company now has a Zacks Rank #3 (Hold).
The key reasons behind JPMorgan’s stable earnings in midst of the
ongoing sluggish economic recovery is its business diversification.
The spread of its portfolio may prove to be as much of a positive
during the recovery as it was during the downturn. Also, JPMorgan
will be able to leverage its strong deposit base when interest
rates finally rise.
Yet JPMorgan’s top-line growth is expected to slow down in the next
few quarters, owing to weak trading revenue 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 Major Banks Worth Considering
While we prefer JPMorgan, other major banks worth a look include
BankUnited, Inc. (BKU), Fifth Third
Bancorp (FITB) and State Street
Corporation (STT). While the first stock carry a Zacks
Rank #1 (Strong Buy), other two retain a Zacks Rank #2 (Buy).
BANKUNITED INC (BKU): Free Stock Analysis Report
FIFTH THIRD BK (FITB): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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