JPMorgan Chase performed better than peers during a tumultuous 2020.
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JPMorgan Chase won a pair of analyst upgrades Thursday as the bank prepares to report fourth-quarter results next week.
While JPMorgan (ticker: JPM), the largest U.S. bank by assets, performed better than peers during a tumultuous 2020, analysts see more upside in the lender as economic conditions improve during 2021.
“The best is yet to come,” Erika Najarian, an analyst at BofA Securities, wrote in a note Thursday in which she raised her rating on the stock to Buy from Neutral and boosted her price target on shares to $160 from $131.
Najarian acknowledged that the bank already trades at a steep multiple compared with peers, but she said it is well-positioned to outperform. JPMorgan shares recently traded at 2.1 time tangible book value, while rival big banks trade at roughly 1.2 times. The bank will be helped by increases in travel and dining activity as well as the steepening of the yield curve as the economy recovers, she writes.
Even if sales and trading activity—which buoyed the bank’s performance last year—proves to be tough to beat, Najarian expects that the negative impact of low interest rates will soon bottom, providing some upside for shares. She also wrote that share buybacks will help the stock this year.
She expects that 2021 earnings will hit $9.75 a share, implying a 15% return on tangible common equity.
Najarian isn’t the only one bullish on JPMorgan shares. Ken Usdin, an analyst at Jefferies, upgraded the stock to Buy from Hold. He also acknowledged that the bank might have difficulty matching last year’s performance in some businesses, such as trading and mortgages, but that tailwinds from cards and payments should offset relative weakness elsewhere. He sees shares hitting $152, up from his previous target of $110.
JPMorgan shares were up 3.1%, at $135.68, in recent trading. The S&P 500 was up 1.6%, and the KBW Bank Index advanced 2.6%.
Write to Carleton English at [email protected]
