This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

JPMorgan Ready to Take Wall Street Top Spot (Update 1)

Stocks in this article: JPMGSMSBACC

In 2011, JPMorgan nearly took the market share lead in M&A advisory volume until a $39 billion merger between AT&T (T) and T-Mobile USA that it advised on was iced by antitrust regulators in December.

The deal breakup added to a gloomy quarter for JPMorgan's investment banking unit, which turned a $726 million 2011 profit on $4.36 billion in revenue. Nevertheless, those earnings reflected a 25% and 45% slowdown in debt and equity trading revenue, respectively.

Watch for trading to pick up again on Wall Street in the first quarter, with JPMorgan, Bank of America, Goldman Sachs and Citigroup all expected to post 20%-plus revenue increases, according to Graseck of Morgan Stanley. In fixed income trading, Goldman Sachs is expected to see trading revenue increase over 100% from the fourth quarter. "GS is the high water mark with Q/Q FICC up an estimated 124%," notes Graseck.

Graseck expects a drop in investment banking fees of 10% and 3%, for the first quarter and 2012, respectively as Wall Street struggles to recover from a second half slowdown. Dealogic data confirms the notion. All of the five largest investment banks are tracking at over 30% declines in first quarter revenue when compared with 2010. Only RBC Capital Markets (RBC) and HSBC (HBC) are expected to show year-over-year investment banking revenue increases. Share price gains at investment banks like Morgan Stanley result from an investor switch to a glass half full mentality from sector-wide pessimism in late 2011, said Credit Suisse analyst Howard Chen in a recent note.

Earlier in March, JPMorgan led a spree of banking sector dividend and buyback increases, bumping up its its quarterly dividend to 30 cents per share from 25 cents. It also authorized a new share repurchase program of $15 billion. JPMorgan spent nearly $9 billion repurchasing shares in 2011, but the strategy didn't lift its shares, forcing CEO Dimon to apologize for his timing by year-end.

Dimon stressed that the bank will buyback shares "only when we are generating capital in excess of what we need to fund our organic growth and when we think it provides excellent value to our existing shareholders." Still, in a February letter to Berkshire Hathaway (BRK.A) shareholders, Warren Buffett praised Dimon's priority on investing in growing JPMorgan over buybacks.

After JPMorgan's poor timing on 2011 buybacks, analysts are more optimistic about the banks 2012 moves. "We believe JPM's strong capital position and management approach should allow the bank to increase dividends and capture market share as management continues to invest in expanding the franchise," wrote Guggenheim Partners analyst Marty Mosby in a Mar. 21 note upgrading JPMorgan's price target to $53 from $51.

Overall, analysts polled by Bloomberg give JPMorgan shares a price target of $49.04, with 34 "buy" ratings to go with 5 "holds." Goldman Sachs and Morgan Stanley shares warrant price targets of $134.05 and $22.14, respectively.

For more on bank investments, see why Warren Buffett is resting as John Paulson digs in and what the investment guru knows about bank investing that you don't. See potential ratings downgrades for more on post-stress test risks and why corporate cash isn't driving record deals.

--Written by Antoine Gara in New York

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs