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Oppenheimer Met With JPMorgan's CFO; Here's What Happened

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In a report published Friday, Oppenheimer analyst Chris Kotowski maintained an Outperform rating on JPMorgan Chase & Co. (NYSE: JPM), with a price target of $81, after meeting the company's CFO Marianne Lake.

Capital and liquidity regulations have made "a very complex job to begin with even more complicated," Kotowski said, while adding, "What is impressive about JPM as an institution is that it seems to have managed its businesses with great consistency despite all this."

JPMorgan's shares seem "reasonably priced" in absolute terms, although they are not as compelling as they have been in the past. With a relative multiple of about 62 percent, the stock appears "way too cheap."

At the February Investor Day, the company had indicated a mid-teens ROTCE, despite a tough regulatory environment. To achieve the targets, three general assumptions had to be made:

  1. Environment: Assume that rates would rise and that there would be greater stability in capital rules
  2. Cost control: Assume that the company would continue to control what they could on expenses
  3. Growth in Drivers: Assume continued growth in the non-interest revenue drivers, like number of accounts, charge volume, etc in the low-to-mid single digits range.

"JPM has demonstrated credibility on Nos. 2 & 3, in our view, and so we dug in No. 1 and the stability of the regulatory environment. Here Lake indicated that while there had been some "step changes" in recent years, she thought the environment was now conducive to stability rather than more step changes," Kotowski wrote.

Latest Ratings for JPM

Apr 2017GuggenheimUpgradesNeutralBuy
Jan 2017Keefe Bruyette & WoodsDowngradesOutperformMarket Perform
Jan 2017UBSInitiates Coverage OnBuy

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