JPMorgan probably lowballing guidance says BAML


JPMorgan's (JPM +1.2%) goal of $27B or $7.10 per share in profits four years from now is "disappointing," says Erica Najarian, considering her team is at $7.00 in 2016, but the bank's numbers are based on some pretty conservative projections.

Among those is no rise in short-term interest rates, no reduction in share count through repurchases, and no loan/fee growth from a continued economic recovery. Her conservative analysis suggests a number more like $29B, or $7.75 in EPS, and $9 in EPS if the bank can shrink its share count by 15% over the next four years.

"In our view, the market often underestimates JPM's potential upside to rising rates and improving loan growth - focusing instead on volatile [investment banking] (6% of revenues) and trading (20% of revenues), and overlooking spread income (44% of revenues)."

She retains her Buy rating and $68 price target.

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