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Buckingham Reviews 'Best In Class' JPMorgan's Q4 Beat

Buckingham Reviews 'Best In Class' JPMorgan's Q4 Beat
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JPMorgan Chase & Co. (NYSE: JPM) reported Friday its fourth quarter results, which came in better than expected.

The Analyst

Buckingham Research Group's James Mitchell maintains a Buy rating on JPMorgan's stock with an unchanged $135 price target.

The Thesis

JPMorgan's earnings report confirms the company's status as a "best-in-class global franchise with above organic growth and returns" remains unchanged, Mitchell said in a note.

Here are some of the analyst's major takeaways from the earnings report:

  • JPMorgan's results excluded a $2.4 billion net impact from tax reform (69 cents per share decrease in EPS).
  • Normalizing the results for a few one-time items, revenue came in $300 million ahead of forecast.
  • The overall beat was driven by strength in consumer, commercial banking, and net interest income (NII).
  • Management's guidance of flat to slightly down NIM is "actually quite positive" when including two fewer days in the first quarter and the FTE impact from the tax cut.
  • Management's guidance of nearly flat NII sequentially implies a "significant benefit" from recent rate hikes
  • Management's guidance of a 19 percent take rate in 2018 is below the analyst's estimate of 23 percent.
  • The one "wild card" from the report and guidance is the degree to which management will accelerate investment spending.

Price Action

Shares of JPMorgan were trading higher by 0.9 percent at $111.75.

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