The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
As ever, JP Morgan will be the first of the major US banks to report figures and investors will be hoping it can get the sector off to a good start.
The last month has seen some of the froth taken off the top of the JP Morgan share price, but bullish momentum still remains. The strategy of US banks and financial institutions has been to deal with regulators early, enabling the finance houses to get on with rebuilding their reputations. Although this is not completed, the frequency of stories involving US companies is far less than those involving their European counterparts.
JP Morgan still relies on its investment banking as well as its banking and credit card business. These have helped drive the share price higher by 7% over the course of 2015. The recent correction over the last three weeks has taken some of the shine away, but the shares still have an attractive record since the bottom of the financial crisis.
The recent press coverage confirming that Jamie Dimon is the most highly paid bank boss – and has been top of that list three times out of the last five years – is maintaining an unwelcome focus on management. In fact if it were not for the fall out of the ‘London Whale’ he could well have maintained that title for longer.
JP Morgan is due to post its second-quarter figures on Tuesday 14 July before the open of US markets. The adjusted earnings per share are expected to fall year-on-year from $1.59 in 2014 to $1.448. Sales are also expected to drift from $25.349 billion last year to $24.474 billion. But with improved cost-cutting measures having been taken over the year, the company’s pre-tax profits should actually improve, rising from $8.331 billion last year to $8.879 billion this year.
Institutional opinion of the bank has remained strong, with 29 buy recommendations, 11 hold recommendations, and no sell recommendations. With the recent fall in the share price there is an almost 7.5% upside between the current share price and the average 12 month outlook of $71.81.