Here come JPMorgan's earnings. These are the key things traders are watching for in the report

Published Thu, Apr 11 20241:14 PM EDT

JPMorgan Chase's report before the bell Friday could kick off the first-quarter earnings season on a positive note, according to Wall Street analysts. The banking giant is expected to report earnings of $4.15 per share and $41.84 billion in revenue, according to LSEG. Many analysts also anticipate an upward revision to net interest income guidance, with the firm already forecasting $90 billion for the full year. "JPM has to us the best mix of attributes among the universals: ultra-conservative [net interest income] guidance that probably needs to be revised upward, strong capital base/return potential, excellent risk profile, and great positioning for this IB recovery," wrote Piper Sandler's Scott Siefers. JPM YTD mountain JPMorgan shares in 2024 Guidance updates represent the most significant stock driver for JPMorgan and the broader group this earnings reporting season, according to Morgan Stanley's Betsy Graseck. The stock has already outperformed the broader indexes year to date, rallying nearly 15%. Graseck views JPMorgan as one of the best-positioned stocks for upward net interest income revisions, also highlighting its significant excess capital relative to others within the firm's coverage. Her earnings estimate sits 17 cents above expectations, and she holds an overweight rating and $221 price target on shares, implying 13% upside from Wednesday's close. What else to watch If not during earnings, this upward guidance adjustment to net interest income could occur at JPMorgan's investor day in May, she said. Commentary alluding to a second dividend hike or an uptick in buybacks could also boost the stock. "Management has already alluded to JPM being asset sensitive, saying at a recent industry conference that at the margin, cuts coming out of the forward curve would be a tailwind to this year's revenues," Graseck wrote. Goldman Sachs analyst Richard Ramsden also highlighted JPMorgan as one of its most constructive buy-rated names, due in part to its conservative net interest income projections for 2024 based on muted deposit beta and loan growth estimates. He holds a buy rating on shares and $229 price target. Analysts also view the prospect of fewer rate cuts as a potential tail wind for JPMorgan this season and beyond. Sticky inflation and hotter-than-expected economic data have shifted Federal Reserve rate cut expectations, with traders now pricing only a slim likelihood of a cut at the central bank's June meeting, according to CME Group's FedWatch tool . Fewer rate cuts, coupled with conservative deposit cost estimates, could power upward earnings per share adjustments for the firm, according to Bank of America's Ebrahim Poonawala, with a buy rating and $220 price objective on shares. "Less cuts in the curve imply that this will take more time to cure," said UBS analyst Erika Najarian. "JPM's ~$600bn of cash at the Fed — larger than its securities book — make it particularly well suited to continue to generate NII during times of curve inversion, where most of its peers need a steeper curve eventually for NII to recover." Another key figure some analysts are watching is earnings from First Republic, which the company took over in May 2023 . The collapse marked the largest bank failure since the 2008 financial crisis. While most of these integrations will conclude later this year, Wells Fargo's Mike Mayo noted that annual incremental earnings from First Republic are expected to hit $2 billion, which would add 40 cents to EPS estimates. He holds an overweight rating and $220 price target on shares. Goldman Sachs' Ramsden said "revenue synergies" from this deal could prompt an upside surprise in fee revenues.