Buy 'best-in-class' JPMorgan Chase thanks to strong earnings potential, Jefferies says
JPMorgan Chase has been a winner in the banking sector, and Jefferies expects that trend to continue. The firm upgraded the banking giant Tuesday to buy from hold. It also raised its price target to $165 per share from $149. Jefferies' forecast implies about 14% upside for the stock from Monday's $145.15 close. JPMorgan's stock has climbed roughly 8% for the year. Meanwhile, the SPDR S & P Bank ETF (KBE) is down more than 18% in that time. On Tuesday, it gained more than 1% before the bell. JPM YTD mountain JPMorgan Chase has climbed more than 8% in 2023. "While JPM has been an absolute and relative outperformer in 2023, its combination of balance sheet strength, strong liquidity positioning, and best in-class earnings generation potential continue to position the bank well," analyst Ken Usdin said. Usdin noted JPMorgan maintains the strongest balance sheets amongst its peers in the large bank space, which will better protect it from a rise in deposit costs. He also said the addition of First Republic to JPMorgan's balance sheet could further juice earnings, while higher fees also strengthen the banks position. "While small in proportion to the overall size of JPM's $3.8T pro forma asset balance sheet, the addition of First Republic could add a few percentage points to EPS [earnings per share] over the next few years," Usdin said. "We believe management was conservative in its original $500mm+ estimate of related accretion (1% at the time)." JPMorgan is slated to report second-quarter earnings Friday before the bell. — CNBC's Michael Bloom contributed to this report.