Categories Analysis, Finance, Markets

Earnings preview: JPMorgan will brave global headwinds in Q4

JPMorgan Chase (JPM) is scheduled to report fourth-quarter results on Tuesday, January 15, amidst high global economic tension and increasing market volatility. The global headwinds – including a slowing economic scenario leading to a potential recession, the Brexit crisis as well as the unending trade war scenario – have already taken its toll on the banking stocks.

Most banking stocks have declined since a year ago, with JPMorgan trading down 11%.

JPMorgan Q4 2018 results

For the fourth quarter, analysts expect the banking giant to report earnings of $2.20 per share, compared to $1.76 per share it posted last year. Meanwhile, revenue is expected to increase by 6.7% year-over-year, primarily driven by trading revenues.

CEO Jamie Dimon had last month stated that the company expects trading revenues to be flat in the fourth quarter at an investors’ meet. Yet, the trading floors have mostly remained busy in the holiday quarter driven by the aforementioned macro-economic factors, the condition of the housing industry and a lack of clarity relating to interest rate hikes.  This should work in favor of JPM, given trading revenues account for almost a quarter of its top line.

Strength in credit card business is another factor that is clearly going to boost results in Q4.

On the other hand, investors are likely to see some weakness in all the other segments. For example, seasonal headwinds are expected to play spoilsport in the financials relating to investment banking. Underwriting activities were generally slow towards the end of last year as companies planning to issue shares waited for a clearer market environment.

Meanwhile, debt origination fees, which contribute about 50% of JPMorgan’s investment banking revenues, were dented by an increase in the interest rates by the Federal Reserve.

Citigroup Q4 revenue drops on weak bond trading; earnings beat

JPM stock has a 12-month average price target of $121.21, suggesting a 21% upside from Friday’s close. Six out of 10 analysts have a Hold rating on the stock while the others recommend Buy.

On Monday, rival Citigroup (C) reported stronger-than-expected earnings for the fourth quarter when revenues dropped and missed estimates. The stock declined 1% in the premarket after the earnings report.

JPMorgan third quarter 2018 Earnings Infographic
JPMorgan third quarter 2018 Earnings Infographic


Get access to timely and accurate verbatim transcripts that are published within hours of the event

Most Popular

Does Unity Software (U) stock has more room to run?

Last month, the IPO market was in a full swing. IPOs of Snowflake (NYSE: SNOW) and JFROG (NASDAQ: FROG) had an impressive opening day in September, the former creating a

PepsiCo (PEP): Steady snacking habits amid pandemic drive strong quarter for beverage giant

PepsiCo Inc. (NASDAQ: PEP) beat market expectations on both revenue and earnings for the third quarter of 2020. The company saw the momentum continue in its snacks business while the

Does the virus-driven boom make Electronic Arts (EA) a good investment?

With more and more people turning to virtual entertainment sources, amid the virus-related movement restrictions, video game publishers like Electronic Arts (NASDAQ: EA) are witnessing unusually high demand. Not surprisingly,

One thought on “Earnings preview: JPMorgan will brave global headwinds in Q4

Leave a Reply

Your email address will not be published. Required fields are marked *

Add Comment

Viewing Highlight