JPMorgan Shares Slump Over 4% as Profit Declines 14% in Q4

JPMorgan shares slumped over 4% in pre-market trading on Friday after the leading global financial services firm said a slowdown in its trading arm caused its profits to decline by 14% in the fourth quarter.

The New York City-based investment bank reported quarterly adjusted earnings of $3.33​​ per share, beating the Wall Street consensus estimates of $3.01 per share. The largest bank in the United States said its revenue jumped 0.6% to $30.35 billion from a year ago. That was also above the market expectations of $29.89 billion.

The bank with over $3.0 trillion Assets Under Management (AUM) said its net income was $10.4 billion, down 14%, driven by higher noninterest expense. Non-interest expense was $17.9 billion, up 11%, largely on higher compensation

Following this, JPMorgan stock slumped over 4% to $160.80 in pre-market trading on Friday. The stock rose over 6% so far this year after gaining nearly 25% in 2021.

Analyst Comments

“JPMorgan (JPM) is trading at 12x our 2023 EPS, which includes accelerating loan growth and 5 rate hikes from here (2 in 2022 and 3 in 2023). With that backdrop, we see more upside elsewhere in the group, particularly in consumer finance stocks which have been under more pressure. This drives our relative Underweight rating,” noted Betsy Graseck, equity analyst at Morgan Stanley.

“JPM also has less excess capital as a % of the market cap relative to other names in the group, which drives a lower benefit from buybacks.”

JPMorgan Chase Stock Price Forecast

Fifteen analysts who offered stock ratings for JPMorgan Chase in the last three months forecast the average price in 12 months of $184.23 with a high forecast of $210.00 and a low forecast of $125.00.

The average price target represents a 9.51% change from the last price of $168.23. From those 15 analysts, 10 rated “Buy”, three rated “Hold” while two rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $184 with a high of $233 under a bull scenario and $119 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. Citigroup raised the price target to $188 from $184. Jefferies cut the target price to $192 from $198. BofA Global Research lifted the price objective to $200 from $190. Piper Sandler increased the target price to $192 from $190.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator are giving mixed signals.

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