Morgan Stanley On JPMorgan Chase: Decline In Stock Represents 'Good Opportunity' To Buy

reported its fourth quarter results on Wednesday before market open. Betsy Graseck of Morgan Stanley on Thursday commented that investors appear to be focusing on the negatives as shares fell following the results. “Investors are concerned about JPMorgan meeting its ROTE targets at a time when NII is under pressure from lower rates, fees from a weaker trading environment, and capital return from increasing regulatory capital requirements,” Graseck wrote. “What can JPMorgan do?” Graseck is “betting on expenses” as management is focused on limited expense growth in 2015 which the company can deliver. The analyst adds that CCB is on track for $2 billion total expense reductions by 2015 while other measures including branch automation, vendor rationalization and reduction in occupancy costs are ongoing. Graseck adds that the recent decline in share prices should be seen as a “good opportunity” to buy shares ahead of the company's Investor Day on February 24th where management is likely to guide an additional $1 billion to $2 billion in cost savings. Finally, the analyst expects JPMorgan to hike its quarterly dividend per share from $0.40 to $0.43 in the second quarter while net buybacks will also be increased to $5.5 billion from $3.5 billion in 2015. Shares are Overweight rated with a $73 price target.