JPMorgan Chase (JPM) can likely recover soon from Friday’s 6.5% share-price decline, with the company’s strengths in consumer, commercial and institutional banking overcoming disappointment caused by missing consensus calls on a handful of Q1 internal metrics, Oppenheimer analysts wrote Monday.
Given its Q1 results appeared to be a “solid beat” on both the top and bottom lines, the Oppenheimer analysts they could not really explain why JPMorgan fell Friday. They reiterated their outperform rating for the company’s stock but tweaked their price target for JPMorgan shares, lowering it to $217 from $219, largely because of changes “in the market multiple, as our 2025 estimates are nearly unchanged,” they wrote.
The analysts said the primary risks for JPMorgan and its share price were credit quality and interest rates as well as potential legal and regulatory issues. The bank, like most of its peers, has significantly reduced its risk profile, although if economic conditions deteriorate more than expected, credit risk could still rise, the analysts said. A lack of expense discipline also could weigh on future results, they said.
On the upside, JPMorgan could see its trading revenues resume their secular growth and it could possibly receive a larger-than-expected earnings boost from its acquisition of First Republic, the analysts said. It also could experience improved “operating leverage as efficiency becomes a greater focus,” they said.
JPMorgan shares still were nearly 1% higher in late-morning trade, giving back a portion of an early 1.6% advance.