NEW YORK (
shares got a lift early Wednesday after UBS upgraded the stock to buy from neutral.
UBS analyst Glenn Schorr in a note to clients says the big universal bank's current stock price is an attractive entry point given its long-term earnings power. Schorr also reiterated his 12-month price target of $50.
"While it's tough to have too much conviction on most financial stocks these days and JPM has been a source of funds for investors looking to get more liquid, we think JPM has top quality businesses, a solid balance sheet, and a really strong management team," Schorr writes in the note. "We also think the U.S. economy is slowly healing, corporate balance sheets are much stronger and JPM is likely to be among the first banks to boost its dividend and return capital when things start to settle."
The stock tacked on 1.4% to $39.06 in recent trades. Based on Tuesday's close at $38.54, the shares had pulled back a little more than 20% since hitting a 52-week high of $48.20 on April 15.
Schorr believes that the ultimate impact of regulatory reform "will be less punitive," but JPMorgan's broad business mix will provide some offset to any changes. Additionally, the U.S. economy continues to improve as credit stabilizes (allowing the company to further build capital organically) and the "secondary effects from sovereign issues coming out of Europe should be somewhat manageable," he writes.
Despite JPMorgan's blowout first-quarter
released a day prior to the stock reaching its 52-week-high, the company's shares have slumped along with rest of the banks because of concerns about financial reform and exposure to the European debt contagion over the past month.
"We see current universal bank valuations as an opportunity to get into top quality names and JPM is as good as it gets," Schorr writes.
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--Written by Laurie Kulikowski in New York.