Shares of JPMorgan Chase & Co. (NYSE:JPM) rose in early trading on Wednesday, despite the company reporting downbeat third-quarter results.
The company reported a strong top-line beat, driven by broad-based revenue growth, with the Commercial & Investment Bank (CIB) being "the standout segment," according to RBC Capital Markets.
The JPMorgan Chase Rating: Analyst Gerard Cassidy maintained an Outperform rating and price target of $370.
The JPMorgan Chase Thesis: The third-quarter earnings aligned with the company’s trend of delivering best-in-class results, Cassidy said in the note.
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He highlighted the following from the latest print:
- Earnings came in at $5.57 per share.
- Excluding one-item items, adjusted earnings would have been $5.80 per share, still missing consensus of $5.91 per share.
- Managed revenue grew 8.0% year-over-year to $50.9 billion.
- Net interest income (NII) rose 13% year-over-year to $27.1 billion, driven by higher deposit and loan balances.
- Reported net income grew around 6.0% year-over-year to $15.3 billion, translating to a 20% return on tangible common equity (ROTCE).
CIB was the standout segment, with net income growing 20% year-over-year to $8.2 billion, the analyst stated.
"The real headline was Equity Markets," with revenue growing 49% year-over-year to $5.0 billion, driven by "strength in Prime brokerage and Derivatives," which pushed total Markets revenue up 15% to $10.3 billion, he added.
"The company’s diversified business model combined with the billions of dollars of investments made over the last decade have resulted not only in a fortress balance sheet but also a highly profitable diversified banking model," Cassidy wrote.
JPMorgan Chaseseems poisedto benefit from the Basel III – Endgame re-proposal, released in March, the analyst further stated.
JPM Price Action: Shares of JPMorgan Chase had risen by 0.42% to $332.82 at the time of publication on Wednesday.
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