NEW YORK (
) -- At least one analyst is sounding the alarm on
. Well, sort of.
Rochdale Securities analyst Richard Bove cut his 12-month price target by $8 to $47 and lowered his earnings estimates through 2012 as JPMorgan Chase faces a number of challenges in its business model "almost everywhere," he writes in a research note to clients.
Bove has made similar calls on other big banks, including
Bank of America
, of late, but in general, Wall Street is very bullish on JPMorgan with 19 of the 22 analysts covering the stock rating it at buy or strong buy. That includes Bove, who is leaving his buy rating intact in Tuesday's call.
How To Buy JPMorgan?
JPMorgan Chase serves continue to have problems and expected government regulation touches just about every major business the company has," Bove writes.
Bove reduced his 2010 earnings estimates by a penny to $2.83 per share; 2011 earning estimates by 2 cents to $3.80 per share; and 2012 earnings by $1.01 to $4.75 a share. Whereas once Bove expected JPMorgan Chase's so-called normalized earnings to come in at $6 a share, he now estimates normalized earnings to be in the range of $5.85 a share, the note says.
Those estimates compare to the current average views of analysts polled by
for earnings from JPMorgan of $3.24 a share in fiscal 2010, $4.75 a share in fiscal 2011, and $5.76 a share in fiscal 2012.
Bove sees "near term problems" in three specific areas of JPMorgan Chase's business: the consumer portfolio, exposure to the debt problems in Europe, and "significant" capital markets problems.
"Underwriting activity has slowed; M&A activity is weak; trading in the equity and high-yield markets is believed to be down meaningfully and the volatile sectors of the market are just not generating the expected trading revenue in currencies, metals and energy," Bove writes.
He estimates JPMorgan Chase's net exposure to troubled countries in Europe ranges between $20 billion and $30 billion.
Bove's concerns differ from other opinions on Wall Street. Last week, UBS analyst Glenn Schorr upgraded the stock to a buy rating, telling investors that the recent dip in
shares represents an attractive buying opportunity.
Bove's comments on JPMorgan also stand in contrast to his opinion on
, which he has recommended be "aggressively" bought by clients.
"The true value of Citigroup is well in excess of its current stock price," Bove wrote in a note issued a little less than a week ago. "Some of its hidden asset values are now being recognized. It is led by a very capable CEO. The stock is seriously undervalued."
On Monday, Bove cut his price target on Bank of America to $22.80 from $27.50, following Friday's call bringing Goldman's target down to $182 from $200. He lowered estimates on both companies, and cut his profit views for
on Monday as well.
JPMorgan Chase shares were climbing 1.1% to $37.14 at midday, with roughly 21 million shares changed hands already. Citigroup shares were rising 1.5% to $3.69 on volume of 395 million.
--Written by Laurie Kulikowski in New York.