Oppenheimer Shares To Cents on JPMorgan Chase & Co. (JPM) Amid Better-Than-Expected Earnings


JPMorgan Chase & Co. (NYSE:JPM) reported fourth-quarter GAAP EPS of $1.71, well ahead of the Street estimate of $1.42. While the company did not issue official 2017 guidance, it did note that net interest income is expected to increase by $3 billion in 2017 given continued asset growth and higher interest rates following the December rate hike.

Despite the earnings beat, Oppenheimer analyst Chris Kotowski remains sidelined, reiterating a Perform rating on shares of JPMorgan. While the analyst continues to view JPM as a good core holding in the banking group, he believes there is more upside at this point in Bank of America (NYSE:BAC) and Citigroup (NYSE:C).

Kotowski wrote, “JPM reported another solid quarter, proving that in most quarters and in most years, banking results tend to be very stable with solid and predictable trends. The company reported a headline EPS number of $1.71, which included $0.13 of tax benefits, and we’d put the “core” operating number around $1.47, a bit better than our $1.43 estimate and consensus of $1.42. Most of the revenue, expense and credit lines were more or less right in line. We’ve built in a bit more of an impact than previously modeled from the December rate hike, so our estimates for 2017 and 2018 are up slightly, but we’re leaving the rest of our assumptions essentially unchanged.”

“We’ll obviously learn more about the underlying business trends next month at investor day, but we think the underlying core businesses are performing well. This is especially true of asset quality, which we think will track better than people expect, since this is what drives the flow of capital back to shareholders,” the analyst added.

 

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