NEW YORK (
will be the first of the big banks to report its quarterly results when it unveils its third-quarter numbers before Wednesday's opening bell, and investors will be anxious to see if the company meets or exceeds Wall Street's relatively lofty expectations.
The current average estimate of analysts polled by Thomson Reuters is for a profit of 52 cents a share from the company (49 cents a share on a fully reported basis) for the three months ended in September on revenue of $24.8 billion. The earnings estimates range from 32 to 65 cents a share.
Of the 23 analysts currently covering JPMorgan, 14 have the stock rated either a strong buy (8) or a buy (6) headed into the report, so there's a fair degree of bullishness. The median analysts' 12-month price target for the stock is $49. The stock was trading down 1.6% to $45.36 in afternoon action on Tuesday.
For the second quarter ended in June, the company turned in a profit of 28 cents a share on revenue of $27.7 billion. Those results reflected a charge of $1.1 billion, or 27 cents a share, related to its repayment of TARP funds, as well as a FDIC special assessment charge of 10 cents a share.
The second-quarter numbers were well ahead of Wall Street's view for earnings of 4 cents a share on revenue of $25.9 billion. An area of particular strength was the company's investment banking business, which generated revenue of $7.3 billion, up 33% from first-quarter levels, with a robust contribution from its fixed income markets operations leading the way. JPMorgan's commercial banking business also thrived in the second quarter, as benefits from the Washington Mutual acquisition kicked in.
Since its second-quarter report on July 16, the stock is up more than 25%, based on Monday's close at $46.08, so it may take another blowout profit to keep the shares moving higher. Here's a few points of interest:
- Investment banking revenue is likely to come in lower -- but still good -- for a few reasons, including the impact of seasonality on trading activities and a likely sequential decline in equity issuance and fixed income volumes, in part because the issuance of government-backed debt has slowed.
- Asset management revenue, which totaled roughly $2 billion in the second quarter, should benefit from the continued run-up in the equity markets through the end of the summer.
- Credit costs will be key. While JPMorgan's consumer loan loss provisioning is likely to decline in the quarter, reserves for commercial loans should continue to climb higher. Additionally, credit card charge-offs could possibly hit the 10% mark.
- Jamie Dimon is nowhere near on his way out, but expect some chatter on the conference call about the company's nascent succession plan. With the ouster of Bill Winters, formerly a co-head of the investment banking business, in late September, Jes Staley, the new sole head of the unit, is viewed in some circles as the heir apparent, but there's no reason to believe Dimon is thinking of leaving the C-suite anytime soon.
Following JPMorgan's expected earnings report on Wednesday,
are set to report on Thursday and
bank of America
is slated to report on Friday.
--Written by Laurie Kulikowski in New York