Opinions
Gordon Reid
JP Morgan Chase & Co
JPM-N
BUY ON WEAKNESS
Feb 03, 2025
Stock price when the opinion was issued
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Flagship US bank. Dimon has done a spectacular job. Pristine risk controls. Trading ~13x PE. Either #1 or #2 in all of its major businesses. Still growing and gaining market share. Core holding in any portfolio. Time is ripe to buy the best, you don't have to go down the food chain. Yield is 2.73%.
(Analysts’ price target is $266.16)Financial sector offers great promise, though it's reacted to current markets by pricing in a potential recession. Slower economic growth would not be good for banks. Absent a recession, with consumer confidence returning and unleashing M&A, the sector provides a good opportunity.
Don't value it on PE. Instead look at price to book, and it's expensive at 1.8x. Less expensive options include BAC and C.
Very efficient, with the lowest overhead ratio and highest ROE of all competitors. Very strong balance sheet, and it's very liquid. Should outperform peers in any type of economic environment. Stock's pulled back on tariff uncertainties about 17% from its highs, now trading ~12.5x forward PE. Increased dividend last week. Yield is 2.42%.
(Analysts’ price target is $257.89)
Likes them both, as well as others in the sector. Don't look at the chart and not buy because it's gone up so much and you've "missed" the price move. Instead, look at the fundamentals -- have earnings, cashflow, revenue growth kept up with the price? Or, look to how it's trading against historical valuations.
This one is up against the upper end of its historical valuation, trading at about 2x book. Somewhat extended, but a great franchise. Good economy, reduced regulation. Unlike other areas of the market, valuations in financials are not extended, so there's opportunity.