Berenberg analyst Peter Richardson upgraded JPMorgan Chase (NYSE:JPM) to Hold from Sell as headwinds of reduced investment banking activity, paused stock buybacks, and rising expenses are temporary and downside risks to the bank's share price are now more limited.
JPMorgan (JPM) shares are trading at ~20% discount to their long-run average, the analyst pointed out.
"It has been clear for some time that 2022 would not be a good year for investment bank ("IB") revenues," Richardson wrote in a note to clients dated July 15. He expects JPM's IB revenue to drop 18% Y/Y during H2 2022. The cyclicality is part of any investment bank's operations, "and JPMorgan's (JPM) revenue remain buoyant by historical standards," he said.
Meanwhile, in JPM's consumer lending credit quality remains strong, and "consumers and businesses have capacity to sustain further loan growth," Richardson said.
JPMorgan (JPM) shares are rising 0.3% in Monday morning trading, gaining the least of the six biggest U.S. banks.
Berenberg's Hold rating on JPM agrees with the Quant rating of Hold, which has poor marks for growth and momentum, and contrasts with the average SA Authors' rating of Buy and the average Wall Street rating of Buy.