(Adds analysts’ comments, updates share price move)
Nov 13 (Reuters) - At least two analysts on Thursday projected that JPMorgan Chase & Co (JPM.N) would suffer write-downs in the range of $1.6 billion to $1.7 billion for the fourth quarter and cut their profit outlook for the bank. Analysts at Citigroup and Fox-Pitt Kelton said they cut fourth-quarter estimates to reflect the recent company outlook of higher-than-expected loan loss reserve additions, likely writedowns as well as private equity losses.
On Wednesday, JPMorgan Chief Executive Jamie Dimon said losses across the bank’s mortgage and credit card portfolios were rising. Dimon also said JPMorgan will add to reserves in the fourth quarter due to rising losses in its subprime mortgage and home-equity loan portfolios.
“The way things are going in the economy, we are now assuming the large reserve-build phase will continue through the first half of 2009,” Fox-Pitt’s David Trone said.
He raised his 2009 reserve build forecast to $4.5 billion from $1.7 billion for the bank.
JPMorgan, which bought Seattle-based thrift Washington Mutual’s banking units in September, is highly exposed to consumer credit, and both Trone and Citigroup’s Keith Horowitz voiced concerns about the bank’s heavy exposure to all areas of consumer credit.
“The near to intermediate-term outlook remains challenged in light of higher credit costs in credit card and in the retail bank, as well as our belief that we are entering a period of sustained lower revenues from JPMorgan’s capital markets business,” Horowitz warned.
Horowitz cut his earnings estimates for JPMorgan by $0.38 a share to $0.10 for the fourth quarter, and lowered 2009 outlook to $2.55 a share from $2.70.
He also cut his price target on the stock to $40 from $45, but still rates the stock “hold.”
Fox-Pitt’s Trone cut his earnings outlook for the fourth quarter to $0.25 a share from $0.65, and for 2009 to $2.90 a share from $3.35.
Trone, however, maintained his “outperform” rating on the stock, and said he views JPMorgan as an outperformer for “...those that want/need to have exposure in financials” because of the bank’s strong capital buffer as well as its fire-sale acquisitions of Bear Stearns and WaMu.
Trone has a price target of $56 on the stock
Shares of JPMorgan were up more than 1 percent at $34.96 in morning trade on the New York Stock Exchange. (Reporting by Tenzin Pema in Bangalore; Editing by Jarshad Kakkrakandy)