JPMorgan cut to hold from buy, as Wells Fargo, Bank of America get buy ratings

By Steve Gelsi

Deutsche Bank analyst Matt O'Connor sees little upside for JPM after stock's 32% YTD rise

JPMorgan Chase & Co.'s strong performance in 2024 has left it with reduced potential for gains, Deutsche Bank analyst Matt O'Connor said Tuesday as he downgraded the banking giant's stock to hold from buy.

"JPM's strong capital generation and execution have made shares a good stock to own over time," O'Connor said in a research note. "However, we see less upside to JPM in the near/medium term as a lot of good news seems priced in."

On the plus side, O'Connor said the bank's stock has been lifted by upside to its net interest income, solid trading, some recovery within investment banking and solid credit, .

JPMorgan Chase's stock (JPM) was down 1% on Tuesday.

All told, the stock has risen 30.9% so far this year while the S&P 500 is up by 16.8% and the Financial Select sector SPDR ETF XLF is up by 21.6% and the KBW Nasdaq Bank Index BKX has gained 19.5%.

JPMorgan Chase is also one of 30 stocks in the Dow Jones Industrial Average DJIA, which is up by 9.1% so far in 2024.

O'Connor said he sees more potential gains in Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) and upgraded both stocks to buy from hold.

Bank of America's stock has risen 21% in 2024 while Wells Fargo is up by 19%.

Bank of America has been lagging the KBW Nasdaq Bank Index over the past six weeks as Berkshire Hathaway (BRK.A) (AT:BRKB) has been selling shares of the bank, O'Connor said.

Bank of America also faces "potential concerns surrounding net interest income given upcoming rate cuts and continued sluggish industry wide loan growth," O'Connor said.

As for Wells Fargo, recent weakness in the stock is creating a buying opportunity even as regulatory risks facing the bank "seem more price in than they did a few months ago," O'Connor said.

O'Connor kept his price targets unchanged for all three stocks: $235 a share for JPM, $65 a share for Wells Fargo and $45 a share for Bank of America.

Wells Fargo's stock was up 0.2% in premarket trading on Tuesday, while Bank of America's stock dipped 0.4%.

-Steve Gelsi

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09-03-24 1143ET

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