Goldman Sachs Defends J.P. Morgan (JPM); 'Down But Not Out'

May 22, 2012 9:57 AM EDT
Get Alerts JPM Hot Sheet
Price: $83.67 +0.44%

Rating Summary:
    17 Buy, 19 Hold, 4 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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After getting blasted since revealing a massive trading loss, shares of JPMorgan (NYSE: JPM) are seeing signs of life today as analysts at Goldman Sachs have come out in its defense.

Commenting on the decision to halt share repurchases, the firm said this was prudent to continue accreting Basel III capital given the volatility and uncertainty around its CIO portfolio. Even building in $5 billion of cumulative losses on its exposure, Goldman sees Basel III levels exceeding 8.5% by 4Q12 and 9.0% by 4Q13, with another 50bp+ of potential upside from planned risk-weighted-asset mitigation.

Although shares could remain range bound until is clarity is available on several issues, with the stock down 20 percent since the disclosure they are now too cheap, the firm notes. Shares are below tangible book value despite an estimates of 13% ROTCE. Also, 2012E/2013E P/E is now near the bottom of all banks. Lastly, the dividend yield of 3.7% is now over 2X the average bank.

The firm revises 2012/2013/2014 EPS estimates to $4.35/$5.50/$6.10 from $4.60/$5.60/$6.20 on lower buybacks and trimmed thiher price target from $48 to $47.

For an analyst ratings summary and ratings history on JPMorgan click here. For more ratings news on JPMorgan click here.

Shares of JPMorgan are up 3.5 percent today to $33.66.

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