JPMorgan Investor Day Arrives Amid Meager Hopes
(Bloomberg) -- JPMorgan Chase & Co.’s investor day on Tuesday comes amid stock underperformance and low expectations for new plans and targets, analysts say. CEO Jamie Dimon and other executives will probably face questions about profits versus growth, market share, Sapphire banking, the payments sector and digital coin efforts.
Commentary about the state of the economy may also be in focus. On Feb. 21, firm economist, Michael Feroli, said December’s durable goods report added to a “sense of downside risk to growth early in the year,” and he cut his early estimate of real annualized GDP growth in the first quarter to 1.5 percent from 1.75 percent.
JPMorgan shares are gaining 1.7 percent in early Monday trading, as banks across the board rise on trade optimism. Year-to-date, share are up about 9 percent versus a 20 percent gain for Bank of America Corp., a 25 percent jump for Citigroup Inc., and an 18 percent rally in the KBW Bank Index.
The investor day is due to start at 8:00 a.m. and conclude around 2:30 p.m., with a call at (866) 541-2724 or www.jpmorganchase.com; slides are due for release at about 6:45 a.m.
Here’s a sample of what some analysts are saying:
Credit Suisse, Susan Roth Katzke
JPMorgan executives may discuss “a reasonably healthy macro backdrop,” along with highlighting JPMorgan’s “willingness and ability” to invest in marketing, advertising, talent and technology, Katzke wrote in a note. She also expects discussion about the firm’s new market strategy and Sapphire Banking, with an emphasis on consolidating share in retail and middle-market commercial banking businesses, along with payments initiatives and the prospects for trading, investment banking and Treasury services platforms.
Capital market comments may reiterate that “markets are recovering (not recovered), trading is good not great” -- meaning that it’s not equal to the first quarter last year -- and that “investment banking pipelines are healthy, though revenue generation has gotten off to a slower start.”
Rates JPMorgan shares outperform, with a target price of $128.
KBW, Brian Kleinhanzl
JPMorgan is likely to outline plans to grow market share in wholesale payments and to offer updates on asset and wealth management and community banking growth initiatives, Kleinhanzl wrote in a note.
KBW expects JPMorgan’s revenue growth will top peers in 2019, but the bank will need to keep investing to gain market share in order to keep that competitive edge. Kleinhanzl is “most interested” in JPMorgan’s payment initiatives and in understanding how it plans to build “a payment ecosystem that will not be disintermediated.” He’s also hoping for an early read on Sapphire’s extension into banking and will look for evidence investments in wealth management, cards and securities services are paying off. Kleinhanzl flagged the stock’s underperformance and said expectations may be low.
Rates JPMorgan outperform, with a price target of $119.
Bernstein, John McDonald
“The stock doesn’t feel crowded going into the event, nor do we think there are expectations for big positive EPS revisions,” McDonald wrote. Investors likely “anticipate another strong showing and positive messaging from management”; Bernstein expects a “constructive tone on the macro, and more about where JPMorgan is investing, prudent risk management, and market share gains.” McDonald rates the stock market-perform, with a price target of $113.
Buckingham, James Mitchell
Expense outlook is a “wild card,” Mitchell wrote in a note. Overall, JPMorgan’s “messaging” is likely to be mixed, as long-term profitability targets are likely to remain unchanged, even with near-term caution about capital markets revenue and modest downside risk to first-quarter consensus estimates.
Capital markets weakness is probably “reasonably well understood by the buy side by now,” which is why full-year outlooks for loan growth, credit, net interest income and expenses are “going to be the foremost drivers of any immediate stock reaction.” Federal Reserve data points to solid year-to-date loan growth and positive U.S. economic and employment data “implies the credit environment remains benign.”
Mitchell reiterates his buy rating and $122 price target.
Deutsche Bank, Matt O’Connor
The bank may provide updates on initiatives including online trading, retail market expansion eﬀorts -- including into Boston, Washington D.C, and Philadelphia -- and its new cryptocurrency. JPMorgan probably won’t announce any material strategy changes.
Barclays, Jason Goldberg
As in years past, JPMorgan is likely to “present a positive and optimistic view,” Goldberg wrote in a note.
Key headlines may include: Raising its medium-term 17 percent Rotce target; updates on digital and branch expansion strategies; “sound” market-related revenues, with first-quarter seasonal growth in trading; active M&A and financing dialogues; and expectations for a “continued relatively benign asset quality backdrop,” though credit costs may grind higher due to loan growth and portfolio seasoning.
Rates shares overweight, with a price target of $140.
Morgan Stanley, Betsy Graseck
JPMorgan will face questions on profits versus growth, consumer efficiency and the payments sector, Graseck wrote in a note.
Key questions for CEO Jamie Dimon include: What may be the bank’s biggest opportunities, perhaps in U.S. consumer, Europe CIB or China asset management; Dimon’s vision for JPMorgan’s payments platform; whether there’s a ceiling on the share the bank can take in FICC or equities; and what Dimon is doing to protect the bank if the economy turns.
Key questions for CFO Marianne Lake include: How to navigate changing deposit betas, at what point slowing deposit growth crimps loan growth, how well positioned JPMorgan’s balance sheet is for dealing with a flat or inverted curve future and how tough the Fed’s stress test process may be this year.
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