Citigroup Downgrades JPMorgan To Neutral

Given that the group is fairly valued at 10.3 percent cost of equity and the EPS forecasts for JPMorgan Chase & Co. JPM are about 2 percent too high for 2017 and 2018, Citi’s Keith Horowitz believes there no longer appears to be meaningful near-term upside for the stock.

Horowitz downgraded the rating on the company from Buy to Neutral, with a price target of $65.

“JPM is probably one of the most consensus longs on the buy side and sell side, which we believe is reflective of a strong management team that has been able to weather the tough macro and regulatory environment better than peers,” the analyst mentioned.

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Not The Right Time

Given the environment of prolonged low rates and growth, Horowitz believes banks are currently trading range stocks, and a better time to add to positions would be when the sentiment if negative.

“While an additional rate hike would be helpful for the banks, we believe what is needed for the banks to breakout through positive EPS revisions is a sustained tightening environment along with a steeper curve,” Horowitz stated.

Bank Of America Better Positioned

Although the analyst continues to see good news regarding rates, Horowitz prefers Bank of America Corp BAC, since it seems to be better positioned for higher rates, with more room for multiple revaluation.

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