JP Morgan fell hard after their Q1 ’24 earnings release, which was probably more of a function of the rally the stock has seen since its $100 low in late 2022, rather than any issues around their quarter or the guidance for 2024.
Morningstar noted that net interest income and trading revenue helped the quarter, and also noted that JPM’s “asset sensitivity” will help NII through the rest of the year as Treasury yields rise. Expected “average” EPS growth over the next 3 years is likely too low at an expected 3% per year. The average PE today is 11x. Average revenue growth expected for the next 3 years is just 2%. This blogstalked about the tough compares in ’24 vs ’23 but if the capital markets stay robust and credit stays contained, the forward estimates should move higher.
Citi does have an internal goal of 11% – 12% ROTCE which they put out to the Street, but the bank didn’t get their this quarter, and Morningstar has doubts about Citi reaching that level., we showed a longer-term chart of Citi and it’s repeated run up to the $80 level and dropping back down. No question Citi will benefit from a lower fed funds rate if the Fed moves, but that’s getting priced further out each week.
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