JPMorgan Q2 Analysis and Chart
Upcoming Earnings – What to Expect
JPMorgan is set to release its Q2 2024 earnings on July 12, before the market open. Analysts project earnings of $4.19 per share, a 4.1% decrease from the previous year. Despite this forecast, JPMorgan has consistently beaten EPS estimates in recent quarters. However, the bank previously cautioned about an "uncertain" outlook due to geopolitical issues and inflation. For fiscal 2024, analysts anticipate EPS of $16.44, down 2.1% from 2023.
Understanding various market scenarios is crucial for identifying opportunities. Market expectations have shifted from a "higher for longer" interest rate environment to anticipating a soft landing where inflation falls towards target and rates are eased. However, the possibility of a recession in the US and Europe remains a concern. Banks are generally well-positioned for all three outcomes, though some scenarios are more favorable than others.
In a higher-for-longer scenario, banks can sustain higher net interest margins, particularly those with more floating-rate mortgages. US money center banks are likely to thrive, while regional banks may face challenges. A soft-landing scenario would challenge net interest margins but improve banks' alternative income sources.
Banks can mitigate some risks through interest rate hedges, and lower rates might ease political pressures and windfall taxes imposed on banks in some European countries.
A recession would be the most challenging scenario for banks, as they often act as proxies for the broader macroeconomic environment. Investor focus would shift to asset quality and potential loan losses, with US regional banks and the Chinese small to medium enterprise sector facing increased scrutiny.
Stock Performance
JPM stock has outperformed both the S&P 500 and the Financial Sector SPDR year-to-date, rising 18.9%. However, shares dropped 4% on May 20 after CEO Jamie Dimon announced limited stock repurchases at current prices. The stock also fell 6% following Q1 results, despite beating revenue and EPS estimates, due to lower-than-expected net interest income and full-year forecasts.
Analyst Outlook
Analysts maintain a "Strong Buy" rating on JPM, with 17 out of 24 analysts recommending a "Strong Buy." The average price target of $205.25 suggests modest upside potential.
JPMorgan Stock Price – Technical Analysis
JPMorgan has had an impressive run since October, rallying 57% and hitting a new record high in trading on 3 July.The price recently surpassed its May record high of $207.55, and has recorded higher highs and higher lows over the year so far. It remains above the 50-day simple moving average (SMA), while the 50-, 100- and 200-day SMAs are all pointing higher. The short-term view remains bullish, while the price holds above the June low at $190.50.
