Sunday, July 22, 2018

JPMorgan Leveraging Its Strengths

While loan growth appears to be improving and credit conditions remain benign, not everything is great in the banking sector, as higher deposit costs are starting to squeeze and the yield curve is flattening out. Even so, JPMorgan Chase (JPM) continues to generate very good results as management skillfully runs one of the best banking franchises in the country. As NIM expansion becomes more challenging, I fully expect the bank’s market share growth efforts to pay off, allowing the bank to outgrow many of its peers.

As far as valuation goes, there still appears to be some upside in the shares. An economic slowdown, or even a recession, is certainly a risk to the sector, but mid-to-high single-digit long-term earnings growth from JPMorgan can still support a fair value in the $115-120 range, while the near-term ROTE likewise supports a similar target.

Read the full article here:
JPMorgan Leveraging Its Strengths

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