Pro News and Analysis

JP Morgan downgraded by KBW: 'Estimates cannot support current valuation'

Share
Key Points
  • J.P. Morgan stock is up more than 37 percent this year, but analysts at Keefe Bruyette & Woods don't expect a repeat of that performance in 2020.
  • The firm said most of the stock's outperformance in 2019 "was driven by shares re-rating after the sell-off in the back part of 2018."
  • "We would look to add shares when valuations are more reasonable, and in our view a Market Perform rating is warranted," the firm said.

J.P. Morgan stock is up more than 37 percent this year, but analysts at Keefe Bruyette & Woods don't expect a repeat of that performance in 2020.

The firm downgraded the stock to "market perform" from "outperform," and placed a target price of $135 on the shares, which were trading for $134.41 at the close of the market on Monday.

"Shares of JPMorgan have been a strong performer in 2019," the analysts wrote, "and we still view JPM as best in class in terms of quality, but we believe that investors should own stocks where consensus earnings estimates have the potential to rise."

The firm said most of the stock's outperformance in 2019 "was driven by shares re-rating after the sell-off in the back part of 2018" and that estimates for future earnings don't support its previous outperform rating.

"JPM is currently trading at 12.6 times our 2020 estimate and this is near the high for the company's recent history," the analysts said. "We would look to add shares when valuations are more reasonable, and in our view a Market Perform rating is warranted."