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Investing.com - Baird downgraded JPMorgan Chase (NYSE:JPM) from neutral to underperform on Friday, while maintaining a price target of $235.00. The banking giant, currently trading at $288.75 with a market capitalization of $802.77 billion, has shown remarkable strength with a 48% return over the past year.
The research firm cited valuation concerns as the primary reason for the downgrade, noting that JPMorgan is trading at approximately 2.9 times tangible book value, which represents a record high valuation for the bank. This observation aligns with InvestingPro data, which indicates the stock is currently overvalued, with technical indicators suggesting overbought conditions.
Baird acknowledged JPMorgan’s status as a "best-in-class franchise" with dominant market share across its businesses and a strong balance sheet, but expressed concern that investor expectations have become too optimistic given current trading levels. The stock trades at a P/E ratio of 14.15x and is hovering near its 52-week high of $289.41.
The firm pointed out that JPMorgan’s current capital-to-assets ratio of approximately 18.2% implies a return on assets of over 1.50% in perpetuity at a 12x multiple, while 2026 return on assets expectations are only about 1.21%.
Baird concluded that returns in JPMorgan shares will likely not match the performance seen in recent years at current valuation levels, despite the bank’s healthy capital position.
In other recent news, JPMorgan has been the focus of several analyst updates and strategic developments. Citi has increased its price target for JPMorgan to $275 from $250, maintaining a Neutral rating. This adjustment reflects the firm’s lowered cost of equity assumption, aligning with current market conditions. Meanwhile, BofA Securities has raised its price target for the company to $325 from $300, maintaining a Buy rating after discussions with JPMorgan’s management about growth strategies in deposits, credit cards, and wealth management. TD Cowen also reiterated its Buy rating and $315 price target, citing impressive growth momentum and potential profitability from artificial intelligence innovations.
In addition to these analyst updates, JPMorgan has made enhancements to its Self-Directed Investing platform. The platform now includes new tools for fixed income investments, such as a Yield Comparison Table and Customizable Screeners, which aim to simplify trading for users. These updates are part of JPMorgan’s broader effort to enhance the investing experience for its customers. Furthermore, JPMorgan is serving as a lead underwriter for the potential IPO of Jennifer Garner’s organic baby food company, Once Upon a Farm. This IPO, which could value the company at approximately $1 billion, reflects a partial recovery in the U.S. market debut sector.
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