FBR Capital said JPMorgan Chase (JPM) stands to benefit from strong capital levels, 4% growth in loan balances from commercial lending and less market volatility as 2012 begins.
In a report Tuesday, FBR reiterated its outperform rating for the banking giant with a target stock price of $46. Last week, JPMorgan Chase reported fourth-quarter earnings of $3.7 billion, or 90 cents a share, which was higher than FBR’s estimate of 88 cents a share. For 2011, the company earned $19 billion, or $4.48 a share, up 9% from the year before.
Still, the bank’s top-line revenue disappointed some analysts, according to Paul Miller, FBR managing director. He added that deleveraging among customers and low interest rates will weigh on the banks’ ability to grow earnings in the near future.
“While this quarter could be seen as showing the effects of economic weakness and the company’s inherent market sensitivity, JPM remains one of the top banks to benefit from increased political and economic clarity over the next year,” Miller said.
“Roughly 75% of the Dodd-Frank rules still need to be completed, and we are starting to see the political winds shift to being more bank and business friendly as we get closer to the election,” he said. “As investors start to see the true effects of new regulation, JPM and banks in general should start to see lower volatility and receive higher multiples.”
Write to Kerri Panchuk.