JPMorgan Chase (JPM) - Get Report is an attractive investment due to the recent aggressive moves by the Federal Reserve in response to the coronavirus pandemic, said an Odeon Capital analyst, who raised his rating on the financial-services giant to buy from hold.
Shares of the New York banking firm at last check were up 3.7% to $91.99.
Analyst Dick Bove, who also instituted a $105.75 price target for the stock, said in a note to clients that "two conflicting forces [are] shaping banks at the moment."
"The first is that loan losses will rise; capital issues must be dealt with; and in all probability dividends will have to be cut," he said. "Based on these fears, all of which I agree with, bank stocks have declined in price."
However, Bove added, "there is a second set of events have developed in the past 60 days due to the aggressive moves taken by the Federal Reserve and the government."
"There is an incredible amount of money around," the analyst said. "These funds have created a number of money-making opportunities for bankers."
It is this second set of developments that make JPMorgan Chase an attractive investment at this time, Bove said, "despite the probability that the company will suffer reversals in its loan portfolios."
"The creation of trillions of dollars will result in higher earnings for those banks that are able to capture the new funds and put them to use," he said.
JPMorgan had 11.01% of the nation's money supply deposited in its bank, Bove said, citing data from the end of the first quarter.
If this market share doesn't decline, JP Morgan picked up $195 billion in deposits in the past two months, he said.
"Overall it would appear that operating profits are doing quite well," Bove said. The quarter might be described as booming."
The stock is worth buying as a speculative investment, he added.