JPM - JPMorgan Chase raised to Overweight at Wells Fargo as Goliath prevails

2023-03-13 08:37:22 ET

Saying "Goliath is winning," Wells Fargo analyst Mike Mayo upgraded JPMorgan Chase ( NYSE: JPM ) to Overweight from Equal Weight on Monday as the behemoth bank should benefit from both offense — in the form of market share gains — and defense — due to its diversification — "in these uncertain times."

The uncertain times, of course, refers to the collapse of SVB Financial's ( SIVB ) Silicon Valley Bank, which was then followed by Signature Bank ( SBNY ) as concerned depositors clamored to withdraw funds.

"As the largest U.S. bank, it [JPM] epitomizes bank industry de-risking that has taken place since the GFC in terms of leverage (almost 1/3 as much), liquidity (est. 50%+ more), and losses (structurally lower)," Mayo wrote in a note to clients. "Recent industry developments should further its ability to gather core funding and act as a source of strength."

Nevertheless, with investors still concerned about banking stocks, JPMorgan ( JPM ) stock slid 1.6% in Monday premarket trading.

The bank, which is gaining market share in recent times, has previously excelled in "times like these when other financial firms have issues," the analyst wrote.

Mayo increased the firm's estimates for JPMorgan's ( JPM ) 2023 EPS by 11% to $12.90 and 2024-2025 EPS by 2% each, bringing 2024 EPS estimate to $13.30 and 2025 EPS estimate to $14.66.

The SA Quant rating , which historically outperforms the broader market, rates JPMorgan ( JPM ) a Hold. Mayo's Overweight rating aligns with the average Wall Street rating and the average SA Author's rating, both at Buy.

SA contributor The Value Investor, with a Hold rating on JPM, explains why the bank is "solid as a rock."

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