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…