JPMorgan: Still a Buy with Record Earnings & Share Price Post Q4
Company Update (JPM US) (Buy)
We believe shares are on a normalized P/E of 11.4x, and a re-rating to 14.5x will drive a low-teens IRR.
Highlights
P/TBV is 1.95x; P/E is 11.4x based on JPM’s 17% ROTCE target
ROTCE was 22% in 2023 and 19% in Q4, but falling each quarter
2024 will see worse NII and expense, with moderate ROTCE impact
Dividend Yield is 2.5%; P/E should re-rate to 14.5x, driving returns
At $167.47, we see a total return of 45% (13.8% p.a.) by 2026. Buy
Introduction
JPMorgan (“JPM”) released its Q4 2023 results on Friday (January 14). Shares have fallen slightly (1.3%) in the subsequent few days, but remain near their 52-week high and close to their all-time high in late 2021:
JPM Share Price (Last 5 Years)
Source: Google Finance (16-Jan-24).
Our current Buy rating on JPM dates back to an upgrade in April 2022. Since then the stock has gained 37.6% (including dividends). JPM was also part of our “Select 15” model portfolio between March and September 2023, generating a 17% gain though also exiting prematurely at a…