JPMorgan Q2 Earnings Beat Estimates, But Revenue Falls

JPMorgan Chase, the leading global financial services firm with assets over $2 trillion, reported better-than-expected earnings in the second quarter but revenue fell 7% to $31.4 billion, sending its shares down over 2% on Tuesday.

The New York City-based investment bank’s net income rose to $11.9 billion, or $3.78 per share, in the quarter ended June 30, up from $4.7 billion, or $1.38 per share, reported a year ago. That was higher than the market consensus estimates of $3.10 per share.

Net revenue came in at $31.4 billion, down 7%. Noninterest revenue was $18.5 billion, down 7%, driven by lower CIB Markets revenue and $678 million of markups on held-for-sale positions in the bridge book recorded in the prior year, largely offset by higher Investment Banking fees in CIB, higher Card income and higher AWM management fees.

At the time of writing, JPMorgan shares traded 2.38% lower at $154.21 on Tuesday. The stock rose over 27% so far this year.

JPMorgan Stock Price Forecast

Thirteen analysts who offered stock ratings for JPMorgan in the last three months forecast the average price in 12 months of $173.55 with a high forecast of $200.00 and a low forecast of $139.00.

The average price target represents a 12.45% change from the last price of $154.33. From those 13 analysts, eight rated “Buy”, four rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $150 with a high of $192 under a bull scenario and $99 under the worst-case scenario. The firm gave an “Underweight” rating on the investment bank’s stock.

Several other analysts have also updated their stock outlook. BMO cut the target price to $136 from $139. Wells Fargo raised the price target to $200 from $195. Credit Suisse lifted the price target to $170 from $165.

Analyst Comments

“JPMorgan (JPM) has less excess capital as a % of the market cap relative to other names in the group, which drives a lower benefit from buybacks. We are valuing the group on normalized 2023 EPS. We expect a V-shaped recovery will drive higher reserve release and share buybacks over the next 2 years, with “normalized” post-recession earnings beginning in 2023,” noted Betsy Graseck, equity analyst at Morgan Stanley.

“We see more upside elsewhere in the group, particularly in consumer finance stocks which have been under more pressure. This drives our Underweight rating.”

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