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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