JPMorgan Chase (NYSE:JPM)
A Wall Street analyst raised shares of JPMorgan Chase (NYSE:JPM) this morning, and the JPM stock has since gone almost 5% higher as of 12:52 p.m. ET. JPMorgan Chase is the biggest bank in the United States by assets.
Then What?
JPMorgan Chase (NYSE:JPM) beat forecasts with its third-quarter profits and revenue announcement on Friday, reporting $3.12 per share on $33.5 billion in managed revenue.
Net interest income (NII), the profit a bank gets on loans and bonds after financing those assets, surged, giving the bank a boost. Consumer credit quality remained strong in the quarter. In addition, with the rise in interest rates increasing the returns on several of JPMorgan’s loans and bonds, management has increased its full-year projection for NII.
With the JPM stock trading at less than $117 this morning, Bank of Montreal analyst James Fotheringham maintained a “market performed” rating. It boosted his price objective on JPM stock from $149 per share to $158.
Fotheringham credited the bank’s high NII and ability to generate “substantial operational leverage,” which occurs when revenue growth exceeds costs. Fotheringham expects the bank might resume stock buybacks in the first quarter of next year if the operational leverage can be maintained. JPMorgan stopped buying back its stock early this year so it could raise funds to comply with new regulations.
What’s Next?
Given the current circumstances, I think JPM stock generated extremely strong quarterly profitability. I anticipate that NII will continue to rise thanks to the higher-rate environment. There is a chance of a worse recession next year, but I’m sure the bank can weather it.
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James Fotheringham, an analyst at the Bank of Montreal, thinks JPMorgan stock is in a good position.
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Author Shariq Khan 
