JPM - JPMorgan Chase: The Fed Put May Propel Shares To New Records

2024-03-27 00:38:18 ET

Summary

• JPMorgan's bull run is expected to continue, as the company is enjoying multiple tailwinds on both macro and company levels.
• On top of fundamental strength, I highlight the renaissance of the fed put, which could potentially significantly change the risk perception of investors towards financial institutions.
• With a more favorable perception of JPM's risk profile, the bank's valuation may be set for a rerating, potentially trading up to the valuation of a typical GARP stock.
• I view a >$300/ share price as possible, projecting a P/E of around ~20x. This would be a valuation similar to the price multiple seen in the broader U.S. equity market.

My Fundamental View On JPMorgan Remains Very Bullish ...

Heading into 2024, I assigned a "Strong Buy" rating to JPMorgan (JPM) stock, arguing that shares were poised to re-rate to the upside, as several fundamental drivers provided a bullish tailwind to the U.S. leading financial institution. Specifically, I present three primary arguments:

Firstly, I point out reasons for optimism relating to the anticipations of a dovish pivot in monetary policy, with the FOMC indicating potential significant rate cuts. This shift is now once more supported by recent updates, with the Fed confirming previously set expectations of a total of 75 basis points worth of rate cuts in 2024. This, paired with a consistent uptrend in GDP growth projections, could support a strong "Soft Landing" thesis that could drive commercial activity in the U.S., and consequently bank lending/ activity....

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