Macquarie Upgrades JP Morgan to Outperform

In a report published today, Macquarie upgraded shares of JPMorgan Chase (JPM) to Outperform from Neutral and raised the price target to $68.00 from $62.00.


“Investors wanting to incorporate a thesis of improving the US and European economies and increasing short-term interest rates may find it very challenging to find new ideas in the bank space, especially for liquid names with attractive valuations. Large regional banks are trading north of 12x 2015E, equating to 84% of the S&P multiple, well above the historical relative multiple of 77%” Macquarie said

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“Moreover, larger domestic plays such as BAC & WFC also appear rich, trading at 11.5x and 12.4x, respectively. As a result, we are upgrading the shares to Outperform from Neutral, as we believe JPM may benefit from a sector rotation as one of the cheapest ways to play this theme,” it added

“At 9.7x 2015E, JPM is one of the cheapest names in our entire bank coverage and trades at an 8% discount to universal peers. JPM has more visible earnings and reports peer-leading ROTCE. While fundamentals are closer to normalized, JPM should benefit from higher rates and improved US & European economies” it noted

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Shares of JPMorgan Chase (JPM) closed at $60.66 on Thursday

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