×

Does JPMorgan Have $20 of Upside?

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.

O’Connor has a buy rating on the stock and a $50 price target.

Trader Guy Adami sees the situation a little differently.

He says rather than focus on the loss, the issue will become the hubris behind the trade – in other words, that they made the bet in the first place. And that he says could put a lid on the share price for quite a while.

Trader Joe Terranova shares the sentiment. "Don't catch the falling knife," he says. There are better places to put money to work.

What do you think? We want to know!

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.



Posted by CNBC's Lee Brodie

______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.


Trader disclosure: On May 21, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long SBUX; Joe Terranova is long SJM; Joe Terranova is long UPL; Joe Terranova is long AAPL; Joe Terranova is long HPQ; Joe Terranova is long LQD; Michael Murphy is long TGT; Michael Murphy is long ANF; Michael Murphy is long HD; Michael Murphy is long FCX; Michael Murphy is long SBUX; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU

Matt O’Connor
Deutsche Bank (and/or affiliates) owns 1% or more of any class of common equity securities of BAC
This company is an investment client of Deutsche bank: BAC
Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year: BAC
This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities related services: BAC
This company is an investment client of BAC: FITB
Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year: FITB
This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities related services: FITB
This company is an investment banking client of Deutsche Bank: KEY
Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year: KEY
This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services: KEY
Deutsche Bank (and/or affiliates) own 1% or more of any class of common equity securities of this company: USB

For Laura Champine
Nothing to disclose


CNBC.com with wires.