With shares of JPMorgan falling more than 20% in less than a month, should you accept the headline risk and hit the buy button?.
According to Deutsche Bank analyst Matt O’Connor the trading loss should be more than manageable for the mega-bank.
He tell us there are 3 key issues to consider:
Size of the Loss – “I think it will be very manageable relative to the $20 billion in earnings power that JPM has,” says O’Connor.
De-Risking - “We estimate that to be a few percentage points of earnings,” he says.
Increase Regulation – “(The trading loss) likely strengthens the case for Volcker and other regulations but that’s already priced into the stock.”
"JPMorgan has some of the strongest capital ratios in the industry and some of the highest liquidity levels in the industry so we think the losses will be very manageable under the vast majority of circumstances," he says.
