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Citi holds JPMorgan shares target, maintains Neutral after solid PPNR beat

EditorEmilio Ghigini
Published 2024/04/12, 15:02
© Reuters.
JPM
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On Friday, Citi maintained its neutral position on JPMorgan Chase & Co. (NYSE:JPM) shares, sustaining a $200.00 price target. The firm's analysis followed JPMorgan's report of a core pre-provision net revenue (PPNR) that exceeded Citi's projections by 28 cents and consensus estimates by 42 cents.

The outperformance was attributed to a stronger top line, including net interest income (NII) and fees, as well as lower than expected expenses, particularly in non-compensation areas.

JPMorgan adjusted its NII excluding Markets guidance upward by $1 billion to approximately $89 billion. This update, however, did not meet market expectations, leading to early trading weakness in JPMorgan shares.

Market participants anticipated a more significant increase in NII projections due to recent changes in the forward curve. Citi noted that the number of rate cuts factored into JPMorgan's new guidance remains unclear.

The bank also revised its adjusted expense guidance, increasing it by $1 billion to around $91 billion. This change primarily stems from the incremental costs associated with the increased Federal Deposit Insurance Corporation (FDIC) special assessment.

Despite these adjustments, JPMorgan's net charge-offs (NCOs) improved, coming in at 62 basis points compared to 68 basis points in the fourth quarter of 2023. Meanwhile, a slight reserve release was reported for the quarter, although non-performing loans (NPLs) rose to $7.7 billion, marking an approximate 11% quarter-over-quarter increase.

JPMorgan's common equity tier 1 (CET1) capital ratio remained stable at 15%, indicating no change from the previous quarter. This measure of financial strength is closely monitored by investors as an indicator of a bank's ability to withstand economic stress.

InvestingPro Insights

For investors considering JPMorgan Chase & Co. (NYSE:JPM), current InvestingPro data shows the bank holding a substantial market capitalization of $561.29 billion, reflecting its significant presence in the financial industry. With an adjusted price-to-earnings (P/E) ratio of 11.72 for the last twelve months as of Q4 2023, JPMorgan appears to be trading at a value that is attractive relative to its near-term earnings growth, as the PEG ratio for the same period stands at a modest 0.34. This suggests that the stock could be undervalued considering its growth prospects.

InvestingPro Tips highlight that JPMorgan has maintained its reputation as a reliable dividend payer, having raised its dividend for 13 consecutive years and maintained dividend payments for 54 consecutive years. This consistency is a key factor for income-focused investors. Moreover, the bank is recognized as a prominent player in the Banks industry and has experienced a high return over the last year, with a price total return of 58.55% as of the date provided.

For those looking to delve deeper into JPMorgan's performance and potential investment opportunities, InvestingPro offers additional tips. There are 14 more InvestingPro Tips available for JPMorgan, which can provide further insights into the company's financial health and market position. To explore these detailed analyses and make more informed decisions, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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