Polini lowered his rating for JPMorgan Chase (JPM) to "Outperform" from "Strong Buy," while cutting his price target for the shares to $46 from $52, and lowering his 2012 earnings estimate to $4.45 a share from $4.70, and his 2013 EPS estimate to $5.10 from $5.48.
JPMorgan's shares closed at $31.99 Tuesday, down 2% year-to-date, following a 20% decline during 2011. The shares trade just below tangible book value, and for six times the consensus 2013 earnings estimate of $5.35. The consensus 2012 EPS estimate is $4.37.
Based on a 30-cent quarterly payout, the shares have a dividend yield of 3.75%.Polini said that although the valuation for JPMorgan's shares is "very attractive, we believe uncertainty related to macroeconomic issues and the [aftermath of the second-quarter hedge trading losses announced on May 10] could undermine strong price appreciation over the near term." The analyst's $46 price target for JPMorgan "is based on JPM trading at about 9.0x our 2013E EPS of $5.10, or in-line with its depressed three-year average P/E multiple of 9.0x, but at a discount to our 15-year industry average (for the nation's 40-largest banks) of 12.5x." Polini said the "discount is warranted given the weak domestic economic recovery and the company's relatively high international exposure." Interested in more on JPMorgan Chase? See TheStreet Ratings' report card for this stock.
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