| 2016-10-13 14:30:05|
JPM, WFC… 14:30 10/13 10/13/16
On The Fly: What to watch in JPMorgan earnings report
JPMorgan (JPM) is scheduled to report results of its third fiscal quarter before the market open on October 14, with a conference call scheduled for 8:30 am EDT. What to watch for: 1. EPS GROWTH: On Tuesday, Compass Point analyst Charles Peabody initiated JPMorgan with a Sell, saying he expects its earnings growth to slow further in 2017 due to higher credit costs, tougher capital markets, and headwinds in wealth management, mortgage bank, and cards. Last week, Sandler O'Neill analyst Jeffery Harte was also bearish on the stock, downgrading JPMorgan to Hold, citing relative share outperformance. This was the fourth downgrade since the last earnings report. On August 8, Citi analyst Keith Horowitz downgraded the stock to Neutral, citing valuation and his belief that 2017 and 2018 consensus earnings estimates are about 2% too high. His peer at Bernstein voiced a similar opinion a week later, with analyst John McDonald downgrading JPMorgan to Market Perform. Last month, Macquarie analyst David Konrad downgraded the stock to Neutral due to valuation and said the interest rate environment is expected to remain challenging, with cost-save expectations largely built into expectations. 2. 2016 OUTLOOK: In the slides that accompanied the company's last earnings call on July 14, JPMorgan said it expects firmwide 2016 net interest income to be up over $2B year-over-year, and 2016 noninterest revenue to be about $50B, market dependent. The company also noted that it sees 2016 adjusted expense to be about $56B and expects 2016 net charge-offs to be less than or equal to $4.75B, with the year-over-year increase driven by both loan growth and Oil & Gas. 3. P2P PAYMENTS: JP Morgan, Wells Fargo (WFC) and other large banks recently unveiled enhancements to a five-year-old joint venture called clearXchange, trying to counterattack PayPal's (PYPL) Venmo, the popular money-transfer service, according to The Wall Street Journal. The bank-owned clearXchange has started offering real-time payments as the battlefield seems to be getting more crowded, with Facebook (FB) and Google (GOOG; GOOGL) pushing into person-to-person payments, the publication said. 4. CHASE PARTNERSHIPS: Early last month, Android Pay, the mobile payments service from Google introduced a partnership with Chase Bank. The partnership means that customers can now add their eligible cards to Android Pay. Additionally, Chase signed a multiyear agreement for Best Buy (BBY) to accept Chase Pay in its stores, on BestBuy.com and in the Best Buy app. Two weeks later, the bank announced that it has expanded its relationship with Walmart (WMT) to process payments on ChaseNet, the bank's closed-loop network, at its over 5,000 Walmart and Sam's Club locations in the U.S. and at Sam's Club ecommerce. 5. BREXIT COMMENTS: Last week, JPMorgan CEO Jamie Dimon said that the U.K.'s vote to exit the EU has heightened the chances that the Eurozone won't be around in 10 years, according to Reuters, citing comments at the Institute of International Finance's 2016 annual membership meeting in Washington.