Oct 9 (Reuters) - Raymond James began coverage on JPMorgan Chase & Co (JPM.N) with a “strong buy”, saying the bank is poised to benefit from acquisitions, organic growth and market share gains.
“Additionally, it has a fortress-like balance sheet and is expected to be one of the first banks ‘out of the gates’ to a more normalized earnings level,” analyst Anthony Polini wrote in a research note dated Oct. 8.
The analyst, who set a price target of $60 on the stock, said JPMorgan was one of the first banks to pay back troubled asset relief program (TARP) money and has maintained positive momentum throughout the recession.
He expects earnings per share for JPMorgan, which acquired Bear Stearns Cos and Washington Mutual Inc last year, to grow at an annualized rate of more than 40 percent over the next three years.
“Although credit quality is expected to deteriorate and loss rates will likely remain high, we do not believe the company will need to aggressively build reserves,” the analyst said.
Every $1.0 billion added to reserves equates to about 16 cents per share in forgone earnings, the analyst said, adding that the company added $2.0 billion to reserves in the second quarter and $4.2 billion in the first.
Shares of JPMorgan were up 10 cents at $45.40 in morning trade on the New York Stock Exchange. (Reporting by Thyagaraju Adinarayan in Bangalore; Editing by Deepak Kannan)