With $3.1 trillion in assets under management, JPMorgan Chase & Co. (JPM - Get Rating) is a leading global financial services firm with operations worldwide. The company’s shares have gained 9.1% in price over the past year, driven by solid topline growth across all segments.

However, the stock declined 6.2% after the JPM posted unimpressive quarterly results last week. Closing yesterday’s trading session at $151.27, the stock is currently trading 12.5% below its 52-week high of 172.96, which it hit on Oct. 25, 2021. In addition, last month, the bank had to pay a $200 million fine to resolve claims that its Wall Street business allowed employees to avoid record-keeping regulations by using texting applications.

Also, JPM CFO Jeremy Barnum lowered his companywide guidance citing inflationary pressures and a tight labor market. JPM expects its expenses to rise 8% to almost $77 billion in 2022, causing the company’s returns to dip compared to recent years.

Here’s what could shape JPM’s performance in the near term:

Mixed Financials

During the fourth quarter, ended December 31, 2021, JPM’s net revenue increased 1% year-over-year to $30.3 billion. Its net interest income grew 3% from its year-ago value to $13.7 billion. However, its net income declined 14% from the prior-year quarter to $10.4 billion, while its EPS decreased 12.1% year-over-year to $3.33. In addition, its noninterest expense grew 11% year-over-year to $17.9 billion.

Consensus Rating and Price Target Indicate Potential Upside

Of 18 Wall Street analysts who rated JPM, 10 rated it Buy, and seven rated it Hold. The 12-month median price target of $178.39 indicates a 17.9% potential upside. The price targets range from a low of $141.00 to a high of $200.00.

POWR Ratings Reflect Uncertainty

JPM has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. JPM has a C grade for Sentiment and Quality. JPM’s mixed financials and consensus estimates are consistent with these grades.

Of the 10 stocks in the D-rated Money Center Banks industry, JPM is ranked #5.

Beyond what I’ve stated above, one can view JPM ratings for Growth, Value, Momentum, and Stability here.

Bottom Line

JPM is a global leader in investment management and has exhibited solid operational performance over the past years. However, the company delivered an unimpressive quarterly earnings release last week. In addition, analysts expect its EPS to decline 24.1% in the next quarter. Moreover, JPM has lowered its 2022 guidance, citing inflationary pressures that are making its near-term prospects uncertain. So, we believe it’s better to wait before scooping up its shares.

JPM shares were trading at $149.94 per share on Wednesday morning, down $1.33 (-0.88%). Year-to-date, JPM has declined -4.74%, versus a -4.01% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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