Oppenheimer analyst Chris Kotowski on Monday reiterated an outperform rating on JPMorgan Chase & Co. and increased his price target on the stock to $233 from $215 after the bank’s stronger-than-expected third-quarter profit update.
“The shares are very attractively priced,” Kotowski said in response to JPMorgan Chase & Co.’s
JPM,
earnings, which at a 35% jump, blasted past Wall Street estimates.
JPMorgan’s stock rose about 0.1% on Monday as positive momentum continued in the banking sector. Wells Fargo & Co.
WFC,
rose by 2.5%, Bank of America Corp.
BAC,
rose 0.7% as well. Citigroup
C,
fell 1% and Goldman Sachs Group Inc.
GS,
moved up by 0.6%. Morgan Stanley
MS,
rose by 0.6%.
“We view JPM as the country’s premier banking franchise with strengths across the board in consumer, commercial and institutional banking as well as asset management,” Kotowski said.
While the bank faced jitters in the marketplace around a flight of deposits or a big jump in deposit costs, that has not happened at JPMorgan, he said.
Meanwhile, the bank is able to build up its capital reserves internally as its regulatory minimum capital levels increased during the quarter despite stock buybacks.
Another plus at JPMorgan Chase is its credit quality, which “remains pretty stable at outstanding levels” although some normalizing is taking place, Kotowski said.
Odeon Capital analyst Richard Bove reiterated a buy rating on JPMorgan Chase and said the bank produced very “positive numbers” due to a sharp increase in its net interest margin, fee increases and a drop in its loan loss provisions, but said unit growth in some of its businesses has weakened.
Meanwhile, Oppenheimer analyst Kotowski reiterated a perform rating on Wells Fargo & Co.
WFC,
and said the bank continues to face mixed business conditions.
“Even though the banking environment is far from pristine, WFC and peers are managing the backdrop as best they can,” he said.
As for Wells Fargo, the bank posted stronger-than-expected net interest income and trading results, Kotowski said.
“When combined with a managed expense base, drove the bottom line beat alongside largely stable credit quality apart from minor, but expected, starting stress from office commercial real estate (CRE),” he said.
Given its current stock price levels, however, Wells Fargo is not as attractive as JPMorgan or Bank of America Corp.
BAC,
which reports third-quarter profit on Tuesday.
Earnings updates are due on Tuesday from Bank of America and Goldman Sachs, followed by Morgan Stanley on Wednesday.
Also read: Banks beat expectations but some economic cracks form as caution abounds
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