On Tuesday, BofA Securities updated their outlook on JPMorgan Chase & Co. (NYSE:JPM) shares, raising the price target to $280 from the previous $260 while reiterating a Buy rating.
The adjustment comes as BofA Securities analysts anticipate a favorable shift in the company's earnings trajectory, driven by sustained higher interest rates and a resurgence in net interest income growth.
The analysts expect the Federal Reserve to implement two rate cuts in 2025, which is factored into their revised earnings per share (EPS) estimates for fiscal years 2025, 2026, and 2027—increasing them by approximately 3%.
The forecast suggests a bottoming out in the first quarter of 2025. They also project that JPMorgan's Common Equity Tier 1 (CET1) capital ratio will remain robust at over 15% throughout the forecast period, comfortably above the 12.3% regulatory minimum, with a 15.3% ratio reported in the third quarter of 2024.
The analysts' fiscal year 2025 projections include a recovery in mergers and acquisitions (M&A) and initial public offering (IPO) activities. They counter the current consensus and Bank of America's own previous fiscal year 2025 earnings estimates, which implied negative EPS growth, suggesting instead that positive revisions could arise from increasing client activity and better-than-expected net interest margin expansion.
Furthermore, they believe EPS growth will be bolstered by returns on franchise investments, including the expansion of JPMorgan's branch network and advisor hiring in the wealth management sector.
The optimistic outlook is further supported by the current trajectory of fiscal year 2024 EPS growth, which is poised to surpass the consensus implied decline of 7% from a year ago, with a projected increase of 4%.
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