Monday, July 12, 2010

JP Morgan, FinReg & Earnings

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JPM Q2 earnings consensus are at $0.82 JPMorgan is scheduled to report on July 15th, before the market opens. Reserving again remains the largest variable to reported earnings. Itz Stock Chartz expect weakness in both equities and fixed income trading. RFS revenues pressured by declining loan balances. That along with FinReg has been factored into the current stock price and at 8 times forward earnings the stock is undervalued. JPM is best positioned to benefit from reserve drawdown in ’10 given slowing growth in problem assets and strong reserve levels. This should support JPM’s ability to achieve a normalized level of earnings ahead of peers. Full-year 2010, 2011, and 2012 operating EPS estimates are $3.30, $4.70 and $5.50. PRICE TARGET $60

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