Is J.P. Morgan Stock a Buy Right Now? This Is What You Need to Know

Earnings season is once again upon us with the banking sector opening proceedings. With economic recovery high on the agenda, banks are expected to do well this year.

The first quarter bore this theme out for industry giant J.P. Morgan (JPM). The company reported Q1 results on Wednesday, with the U.S. bank handily beating the estimates.

Revenue increased by 14.3% year-over-year, reaching $32.3 billion, in the process coming in $1.99 billion above the Street’s forecast. There was a beat on the bottom-line too, with Q1 GAAP EPS of $4.50 blasting higher by 477% year-over-year and beating the consensus estimate by $1.38. However, earnings got a big push from the firm releasing $5.2 billion from credit loss reserves in the quarter.

Segment wise, although consumer banking revenue dropped by 10% year-over-year to $6.7 billion, investment banking revenue grew more than threefold to $2.9 billion.

JPM’s CEO Jamie Dimon reiterated his previous stance regarding the macro view, anticipating “extremely robust multi-year growth.” As far as the company’s outlook is concerned, the net interest income (NII) guidance for FY2021 – revised downwards during the quarter – remains at $55 billion. Although expenses for the year – at $70 billion – are anticipated to come in higher than the prior $69 billion estimate. Management also noted its share buyback capacity for the second quarter stands at $7.4 billion.

Overall, Deutsche Bank’s Matt O’Connor applauds a “strong quarter” and highlights several surprises:

To this end, O’Conner rates JPM shares a Buy along with a $175 price target. This figure suggests a 14% upside over the next 12 months. (To view O’Connor’s track record, click here)

The outlook according to the rest of the Street is slightly more subdued. Based on 11 Buys, 5 Holds and 1 Sell, JPM stock has a Moderate Buy consensus rating. The forecast is for one-year gains of ~8%, given the average price target clocks in at $166.07. (See JPM stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.