JPMorgan stock double upgraded to ‘overweight’ at Morgan Stanley

on Dec 6, 2022
  • Morgan Stanley's Graseck now sees upside in JPMorgan to $153.
  • She's bullish primarily on its operating leverage inflecting positively.
  • JPMorgan stock is currently down nearly 25% versus its YTD high.

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JPMorgan Chase & Co (NYSE: JPM) has already climbed nearly 30% over the past two months but a Morgan Stanley analyst sees further upside into the next year.

The bull case for JPMorgan stock

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Interestingly, Betsy Graseck doesn’t feel the same about JPM peers and actually recommends against investing in large cap banks in the face of quantitative tightening.

JPMorgan stock, though, she double upgraded this morning to “overweight” citing its operating leverage inflecting positively. In 2022, JPMorgan improved its operating leverage from -510 bps to -260 bps and Graseck expects it to further bump to +110 bps next year.

While 110 bps isn’t an eye-popping number, it’s a significant inflection from the last two years of negative operating leverage at JPM.

A just over 3.0% dividend yield also makes this stock more attractive to own.

JPMorgan stock could climb to $153

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The Morgan Stanley analyst now sees upside in JPMorgan stock to $153 – that translates to about a 20% premium on its current price.

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We think risks around operating leverage skew to the upside as JPM has already provided guidance on 2023 NII of ~$74 billion and our 9.0% expense growth estimate feels conservative.

In October, JPMorgan Chase reported better-than-expected results for its third financial quarter (read more). Versus their year-to-date high, shares of the multinational investment bank are currently down nearly 25%.

Graseck also recommends buying JPMorgan stock as it doesn’t de-rates as much as peers in a recession. Its Consumer & Community Bank is also expanding share across the U.S., she concluded.


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