JPMorgan: Too Expensive As Post-COVID Deceleration Continued In Q3

(Preview) Company Update (JPM US) (Neutral)

Summary

• JPM released Q3 results this morning, which we believe confirm our view that the stock is fully-valued and should be rated Neutral.

• Pre-Provision Pre-Tax Profit, which excludes one-off reserve releases, has continued to decline from the cyclical peak in Q1 2021.

• Non-Interest Revenues declined as Investment Banking normalizes from its pandemic-driven record level. Card Income was down substantially.

• Net Interest Revenues rose slightly. Full-year 2021 outlook remains unchanged on Net Interest Revenues and Expenses.

• With shares at $165.36, we expect a total return of 17% (5.1% annualized) by 2024 year-end, below our typical requirement.

Introduction

We review our Neutral rating on JPMorgan Chase & Co. following Q3 2021 results this morning (October 13).

We downgraded our rating on JPM in April 2021, having seen the stock gain 74.6% (including dividends) in a year while Buy-rated in our coverage.

Our downgrade was based on valuation - we believe that the quality and future earnings potent…