JPMorgan: Q3 Was The Calm Before The Storm, But Don't Worry
(Preview) Company Update (JPM US) (Buy)
Summary
JPM reported an above-target Return on Tangible Common Equity of 18% in Q3 2022 on Friday, but things may turn difficult thereafter.
Q3 earnings was boosted by higher interest rates, which boosted interest income but has not yet damaged loan growth or credit losses.
CEO Jamie Dimon has warned on the possibility of a U.S. recession in 6-9 months, but also predicted limited JPM credit losses in that event.
Management remain confident on their 17% medium-term return target, which implies JPM stock is trading at less than 10x P/E.
With shares at $111.19, we expect a total return of 86% (22.5% annualized) by 2025 year-end. Dividend Yield is 3.6%. Buy.
Introduction
JPMorgan Chase & Co. reported their Q3 2022 results on Friday (October 14). JPM stock finished the day up 1.7%.
We upgraded our rating on JPM from to Buy in April, having covered the stock on Seeking Alpha since 2019. JPM shares are currently down 11.0% (after dividends) since our upgrade, having fallen by 31% year-to-date:
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