NEW YORK (
) -- A bullish company assessment of profit potential coming out of its annual investor day sent shares of
The company said during its meeting with institutional investors Thursday that it could double its net income in the next few years as the financial crisis abates and its two significant acquisitions continue to add to the bottom line.
The stock was recently up 3.7% to $42.15. Volume of 53.3 million was outpacing the issue's trailing three-month daily average of 43.2 million. JPMorgan hit its 52-week high of $47.47 back in October, and the stock pulled back from a strong initial start to 2010 after President Obama embraced the so-called 'Volcker Rule', which calls for a ban on proprietary trading and other risky tactics at banks.
"JPM's annual investor day once again left us with a renewed sense of confidence that it has a well-positioned and well-managed portfolio of companies that should do relatively well in just about any environment and absolutely well if the economic recovery continues to gain hold," says Chris Kotowski, an analyst at Oppenheimer in a research note.
CFO Mike Cavanagh kicked off the seven-hour conference on Thursday in midtown Manhattan. Despite the foul weather hitting the New York area, more than 400 attendees were at the conference and many more listened remotely.
Despite regulatory and political pressures, the changing business landscape for some areas, like credit cards, and a shrinking of the balance sheet as it works to runoff certain loans, Cavanagh said that JPMorgan had the potential to ramp annual net income up to between $22 billion and $24 billion if current performance targets are met. The company recorded annual net income of $11.7 billion in 2009.
The added net income would result in significant capital generation, on top of the excess capital that JPMorgan will likely have once it starts to releases reserves against loan losses. The company's two significant acquisitions in 2008 -- that of Bear Stearns and Washington Mutual -- would be major contributors to the increased income.
Chairman and CEO Jamie Dimon remains cautious on the economy, however. In the later hours of the conference, Dimon suggested that an increase to the company's common stock dividend or share repurchases were still some months away as the company would like to see several months of improving economic performance first.
Analysts seemed pleased with the company's overall message.
Keefe Bruyette & Woods analyst David Konrad writes in a note that although political risks persist, "we continue to believe JPM represents one of the best values in the BKX, as the combination of a strong balance sheet, increased earnings visibility, and overall momentum of the franchise support our thesis."
Konrad adds that JPMorgan Chase's valuation is "compelling" and notes the stock is trading at 6.8 times his unlevered normalized earnings estimate vs. 7.6 times at other large cap banks.
--Written by Laurie Kulikowski in New York.