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JPMorgan Chase Wins Again

Later on Wednesday the minutes of the last FOMC meeting on April 30 and May 1 were released, indicating that the committee as a whole might lean toward curtailing asset purchases more quickly than Bernanke's comments indicated:

"A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth; however, views differed about what evidence would be necessary and the likelihood of that outcome," according to the minutes.

The KBW Bank Index (I:BKX) was down 1% to close at 60.91.

JPMorgan Chase

Shares of JPMorgan have returned 24% this year, following a 36% return during 2012. The shares trade for 9.0 times the consensus 2014 earnings estimate of $5.94 a share, among analysts polled by Thomson Reuters. This is the cheapest forward price-to-earnings valuation among the "big six" U.S. banks:

  • Citigroup's (C) shares on Wednesday closed at $50.99 and traded for 9.6 times the consensus 2014 EPS estimate of $5.32.
  • Morgan Stanley (MS) closed at $24.71 and traded for 9.7 times the consensus 2014 EPS estimate of $2.54.
  • Shares of Bank of America (BAC) closed at $13.30 and traded for 10.3 times the consensus 2014 EPS estimate of $1.29.
  • Wells Fargo (WFC) closed at $40.11 and traded for 10.3 times the consensus 2014 EPS estimate of $3.90.
  • Goldman Sachs (GS) closed at $159.41 and traded for 10.4 times the consensus 2014 EPS estimate of $15.27.


With Dimon successfully shrugging off the attempt by some shareholders to split his dual roles as JPMorgan's CEO and chairman of the board of directors, Sterne Agee analyst Todd Hagerman wrote in a note to clients on Tuesday that "the incremental headline risk associated with a potential management re-shuffling should subside, with an increased investor focus on the company's otherwise solid operating results."

Hagerman rates JPMorgan Chase a "buy," with a price target of $54.00.

KBW analyst Christopher Mutascio on Wednesday reiterated his "outperform" rating for JPMorgan Chase, while raising his price target for the shares to $58 from $54.

"Our original target price of $54 was on the conservative side," Mutascio wrote in a note to clients, "representing less than 9.5x our 2014 EPS estimate of $5.80, as we were concerned about the lingering impact the London Whale incident would have on the company's P/E multiple. But, with the market willing to put a P/E multiple of 12.0x on names like [KeyCorp (KEY)], we don't think it is unreasonable for JPM to trade at 10.0x -- which is the low end of our large cap banks' historical range of 10.0x-12.0x."

JPM ChartJPM data by YCharts

Interested in more on JPMorgan Chase? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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