Stock of the day: analysts weary ahead of JPMorgan's expected 2% dip
JPMorgan earnings expected to dip by 2%.
[AI generated]
Stock of the day: JPMorgan (ASX: JPM)
Ahead of its earnings report due on Friday US time, JPMorgan Chase & Co. (JPM) has been the stock of the day. Despite the recent pullback, JPMorgan's stock price has surged nearly 42% over the past year, outperforming many sectors despite sticky inflation and uncertain geopolitical issues. However, is this as good as it gets for JPMorgan?
Earnings expectations
IG analysts project that the earnings per share (EPS) for JPMorgan will decline by approximately 2% for the 2024 financial year. Revenue growth for the year is expected to be around 7%, which, while respectable, pales in comparison to other sectors experiencing double-digit and even triple-digit growth.
Considerations for shareholders
Concerns are expressed over JPMorgan's expenditure, particularly in areas such as artificial intelligence. This is a stock that is built for the bankers to profit, not shareholders. Higher costs, including compensation and AI spending, could derail economic efficiency in the short run.
Although, optimistic about net interest income and loan growth, there might be better opportunities in the US banking market. Analysts suggest looking elsewhere, such as US Bank Corp, instead of an investment banking model like JPMorgan at this stage.
A balanced view
While JPMorgan has had a strong run, there are cautionary signals that cannot be ignored. If you're currently holding JPMorgan, taking some profits might be a wise decision. However, entering a position at these levels may not be advisable.
JPMorgan is set to release its earnings report on Friday, and while there is optimism around revenue growth and investment banking fees, rising costs and potential pullbacks warrant a cautious approach. Analysts suggest considering taking profits if you're already invested but recommend looking at other opportunities within the US banking market for new investments.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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