The annual investor day for JP Morgan Chase and Co. was hosted yesterday in New York City, where the management of the company probed into performance expectations for 2016. The narratives from the company all started on a very positive note, however, a cautious tone was maintained throughout, which, can be attributed to declining oil prices. An especially cautious stance was maintained regarding the energy market and revenues derived from such. The management expected to land in the 4.5% range of GSIB capital surcharge during the previous year’s investor day, however, it was adjusted to the 3.5% category during yesterday’s meeting.
Paul Miller, analyst at FBR capital, observed the proceedings and as a result has adjusted his 2016 EPS estimate. He slightly reduced the EPS estimate to $6.05 from $6.20. It may be noted that if the oil prices do not improve from $25 per barrel range in the near future, it can lead to even further reduction in EPS and revenue estimates.
JP Morgan Chase is currently guiding for $50 billion in non-interest revenues during the year 2016, which, is a tad lower than yesteryears $51 billion. Daniel Pinto expects banking revenues to drop by 25% during the first quarter of 2016 and has attributed the decline to weak market situation. The bank is likely to maintain its $56 billion operating expense base for the year 2016.
The stock currently trades at 1.2 times the tangible book value of Q4FY15. The stock has a $75 price target which is roughly 11.5 times the 2017 EPS estimate of $6.50. The analyst opinion on the stock is mostly on the positive side of the line with 10 Strong Buys, 16 Buys and five Hold ratings. The stock is currently trading at $54.42.