He’s not arguing that the stock market has hit bottom. Rather, he’s “highlighting a name that, after a significant market selloff, we believe is poised to be a relative outperformer whether the operating environment continues to deteriorate or rebounds,” Harte wrote in a report.
While JPMorgan shares dropped 14.5% last week, its loss was smaller than that of money center banks at 17% and large-cap banks at 15.2%, Harte noted.
“If the macro environment proves to be as sustainably difficult as implied by a record low 10-year Treasury yield, we would expect JPM shares to continue outperforming peers as the strong get stronger,” he wrote. The 10-year yield touched a record low of 1.03% Monday before rebounding to 1.08%
“We specifically like JPM’s diverse and relatively fee heavy revenue mix, combination of market leadership and scale across businesses, capacity to reduce expenses if needed, strong balance sheet and capacity to continue repurchasing shares,” Harte said.
He confirmed his share-price target of $149. At last check, JPMorgan shares traded at $118.63, up 2.17%.
Other banks also received favorable analyst reactions on Monday. Robert Baird analyst David George lifted his ratings of Regions Financial (RF) - Get Report, Fifth Third (FITB) - Get Report and First Horizon National (FHN) - Get Report to outperform. He said the impact of the coronavirus on bank earnings will be temporary.
Goldman Sachs analyst Richard Ramsden wrote that Citigroup (C) - Get Report, Bank of America BAC and Morgan Stanley (MS) - Get Report, “screen as having attractive valuations relative to downside returns." He rated Citigroup and Bank of America as buys and Morgan Stanley as neutral.
The author of this story owns shares of JPMorgan Chase.