NEW YORK (TheStreet) -- J.P. Morgan (JPM) fell Monday after the bank announced it expects revenue from fixed income and equities trading to drop 20% in the second quarter due to a challenging environment with lower client activity levels.
The bank also said it incurred $347 million in legal fees in the first quarter.
Furthermore, Norway passed over J.P. Morgan in favor of Citigroup (C) to manage its sovereign oil wealth fund. This is the largest such fund in the world with $865 billion in assets.
The stock was down 2.28% to $54.31 at 10:22 a.m. on Monday.
Separately, TheStreet Ratings team rates JPMORGAN CHASE & CO as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate JPMORGAN CHASE & CO (JPM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, attractive valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.5%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for JPMORGAN CHASE & CO is currently very high, coming in at 88.15%. Regardless of JPM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, JPM's net profit margin of 20.99% compares favorably to the industry average.
- JPMORGAN CHASE & CO's earnings per share declined by 19.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, JPMORGAN CHASE & CO reported lower earnings of $4.32 versus $5.19 in the prior year. This year, the market expects an improvement in earnings ($5.57 versus $4.32).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: JPM Ratings Report