In this article, let's take a look at JPMorgan Chase & Co. (JPM, Financial), the $229.95 billion market cap company which was recently upgraded.
Analysts at Keefe Bruyette & Woods raised the bank's rating to Outperform from Market Perform. Further, it has raised the price target to $77. Yahoo! Finance estimates a one-year price at $74.68, a 20% upside potential.
The bank has recorded billions in legal expenses, and it is possible that it will be forced to have more capital than peers, as well as more regulatory requirements.
Despite this, it will continue to create value for shareholders. The firm has an attractive dividend policy showing its commitment to return cash to investors in the form of dividends as it generates healthy cash flow on a regular basis. According to company reports, dividends have been paid since 1827. The current yield is at 2.6% and is close to the three-year high.
Although revenues have declined in the past four years, we are expecting a positive revenue growth for the next two years. For 2015, net interest income may decrease, but the trend will reverse next year.
Further, CEO Jamie Dimon has commanded the bank’s success since 2005, making the bank achieve a good level of profitability. The question is: Will a future CEO be talented as Dimon?
As of June, Ken Fisher (Trades, Portfolio)´s Fisher Asset Management reported holding 13.74 million shares, up by 2% in the quarter; the value of the stake amounts to $931.1 million. It is important to mention that the stock gained about 3.79% in the past 12 months but lost 0.62% on a year-to-date basis.
Other investors also reported long positions in JPMorgan. Paul Ruddock and Steve Heinz´s Lansdowne Partners reported a position of 21.16 million shares, representing more than 12.2% of the portfolio, valued at $1.43 billion. Moreover, three gurus have initiated new positions. They are Stanley Druckenmiller (Trades, Portfolio), Ken Heebner (Trades, Portfolio) and Tom Gayner (Trades, Portfolio) with 777,300; 570,000 and 85,000 shares, respectively.
Another bank that Ken Fisher (Trades, Portfolio) is betting on is Bank of America (BAC, Financial). The guru held 42.69 million shares, up by 2%, valued at $726.66 million as of the end of the second quarter. Bruce Berkowitz (Trades, Portfolio) is the largest shareholder of this bank, which reduced its stake by 2% to 75.48 million shares.
Disclosure: Omar Venerio holds no position in any stocks mentioned.
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