JPMorgan Near Buy Zone: Here’s The Earnings Metric To Watch

JPMorgan Chase (JPM) kicks off the fourth-quarter earnings season for big banks early Friday. Wall Street expects weaker earnings as recession concerns weigh on the market, while growth in net interest income is projected to accelerate. JPM stock edged higher on Wednesday.

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JPMorgan earnings fell in the past four quarters. The New York-based bank has seen an uptick in revenue for its last two quarters, rebounding after four consecutive declines. In Q3, earnings fell 16.6% to $3.12 per share while revenue rose 10% to $32.7 billion.

Deutsche Bank analyst Matt O’Connor sees new lows on the horizon for U.S. bank stocks. Bank earnings may be peaking, O’Connor wrote in a research note last Friday, and banks could see downside risk from bulking up reserves ahead of a possible recession. O’Connor downgraded JPM stock to hold and lowered the price target to 145 from 150.

Still, with the Federal Reserve’s rate hike cycle still climbing, interest rates are for now expected to continue rising, which can help bank performance.

A Jan. 3 note from Barclays analyst Jason Goldberg projected that bank stocks will likely show resilience, despite recession concerns. He believes net interest margins for large-cap banks will peak in 2023 while loan growth slows and loan losses increase. Goldberg says lower-end consumer and commercial real estate will see the fastest loan losses.

The Barclays analyst raised his price target on JPM stock to 189 from 162 — almost 37% above where the stock closed Tuesday — and maintained the overweight rating on the shares.

JPMorgan Earnings

Expectations: Analysts predict JPMorgan earnings will slide 6.3% to $3.12 per share on 17.5% revenue growth to $34.3 billion, according to FactSet. Wall Street sees adjusted net income at $3.08 per share, falling from $3.33 last year.

Net interest income is projected to surge more than 39%, to $19.1 billion.  That would mark a fifth straight quarterly gain.

Consumer banking revenue is expected to leap 27% to $15.6 billion while investment banking revenue dips 6% to $10.8 billion.

JPM Stock

JPM stock is up almost 37% the last three months but down nearly 13% since the beginning of 2022.

Shares eclipsed the 138.76 buy point for its flat base on Wednesday, setting the stock up for what could be its first breakout in more than a year. The current buy zone extends to 145.69, or 5% above the buy point. The base sits atop support at the stock’s 50-day/10-week moving average.

However, investors should remain cautious when considering new positions so close to earnings.

You can follow Harrison Miller for more news and stock updates on Twitter @IBD_Harrison.

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