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What to Expect from JPMorgan Chase in Q2

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JPMorgan Chase

JPMorgan Chase (JPM) is scheduled to announce its second-quarter results before the markets open on July 16. We expect the bank’s revenues and EPS to improve on a YoY (year-over-year) basis. JPMorgan Chase’s revenues are expected to benefit from higher net interest income and growth in IB (investment banking) revenue. Lending growth is expected to support the net interest income. The strong pipeline is expected to support the IB revenue growth.

During the last reported quarter, the IB revenue rose 10% to $1.7 billion. The increase reflected higher debt underwriting and advisory fees. However, lower equity underwriting fees remained a drag.

The markets’ equity underwriting fees and revenues could stay low. However, the company’s management expects a recovery in quality underwriting fees as IPO volumes come back to normal.

The costs are expected to increase due to investments in the business. However, the earnings are expected to sustain the momentum. The earnings are expected to mark healthy growth due to higher net interest income and share repurchases.

Analysts’ consensus estimate

Analysts expect JPMorgan Chase to post revenues of $29.0 billion, which implies growth of 2.1% YoY. Loan and deposit growth and increased investment banking revenues are expected to drive the bank’s revenues.

Analysts expect JPMorgan Chase to post an adjusted EPS of $2.51 in the second quarter, which indicates growth of 9.6% YoY.

Analysts expect Citigroup’s (C) revenues and earnings to improve YoY in the second quarter. Higher lending and deposits are expected to drive Citigroup’s revenues. Cost-savings and share repurchases are expected to support double-digit EPS growth.

Analysts’ rating and target price

Most of the analysts maintained a “buy” on JPMorgan Chase stock before the second-quarter earnings. Among the 29 analysts, 15 recommended a “buy,” 13 recommended a “hold,” and one recommended a “sell.” Jefferies increased its target price to $121 per share on JPMorgan Chase stock from $118 on Tuesday.

The consensus target price of $118.72 per share implies a potential upside of 4.7% based on its closing price of $113.35 on Tuesday.

Stock performance

So far, JPMorgan Chase shares have increased 16.1% this year. The better-than-expected first-quarter performance drove JPMorgan Chase stock higher. The higher interest rate and lending and deposit growth supported other major banks’ stock prices in the US.

Citigroup, Bank of America, and Goldman Sachs shares have increased 37.5%, 19.1%, and 24.4% year-to-date.

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