Skip to main content

Market Overview

JPMorgan Chase Falls On Downgrade, Analyst Says Valuation Reflects Its Revenue Power

JPMorgan Chase Falls On Downgrade, Analyst Says Valuation Reflects Its Revenue Power

While JPMorgan Chase & Co’s (NYSE: JPM) revenue power is likely to remain best-in-class, the company is rate-sensitive and the Federal Reserve’s rate cuts will hurt performance even if the balance sheet continues to grow, according to BofA Securities.

The JPMorgan Analyst

Erika Najarian downgraded JPMorgan from Buy to Neutral, while reducing the price target from $147 to $100.

The JPMorgan Thesis

Even in a recession, JPMorgan could generate fee growth of 1% in 2020 and 5% in 2021, Najarian said in the downgrade note. The Corporate & Investment Bank unit seems poised to continue gaining market share, while the company’s trading revenue may grow due to market volatility and wider spreads.

The analyst said, however, that the 150 basis points reduction in the fed funs rate will hurt JPMorgan. She lowered the earnings estimates for 2020 and 2021 by 24% to $8.08 per share and 34% to $7.55 per share, respectively, saying that the reduction reflects a possible U.S. recession.

Credit performance in the banking industry is likely to be the most challenged for unsecured consumer loans and the commercial & industrial segment. When the economy recovers, peers may see their stocks bounce back more than JPMorgan Chase, given its already premium valuation, Najarian mentioned.

JPM Price Action

Shares of JPMorgan declined 5.5% to $92.43 at time of publication Friday.

Related Links:

United Airlines CEO: 'Time Is Running Out' For Federal Aid

Companies Suspend Dividends, Buybacks As Pandemic Weakens Market

Photo credit: Joe Mabel, Wikimedia

Latest Ratings for JPM

Apr 2021Wells FargoMaintainsOverweight
Apr 2021Atlantic EquitiesDowngradesOverweightNeutral
Apr 2021DA DavidsonMaintainsBuy

View More Analyst Ratings for JPM
View the Latest Analyst Ratings


Related Articles (JPM)

View Comments and Join the Discussion!

Posted-In: BofA Securities Erika NajarianAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

PHXSeaport GlobalInitiates Coverage On
AFCGLake StreetInitiates Coverage On29.0
OSSNoble Capital MarketsUpgrades7.0
NCNOGabelli & Co.Upgrades
HAECJS SecuritiesUpgrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at