Thursday, April 15, 2010

J.P.Morgan Chase & Co. Credit Improvement Playing Out; Most Bullish Price Target of $61 +28% $JPM

Investment Thesis
•We are Overweight JPM given its earlycapital markets and card businesses and stronger risk management relative topeers and strong capital levels.
NEW YORK - JANUARY 16: (FILE PHOTO) The JPMorg...•Accretion from the WM acquisition driveshigher earnings growth going forward.
•Expect JPM’s stronger balance sheet willenable it to take share.

Key Value Drivers
•Card – Declining early stagedelinquencies should lead to modestreserve release and losses peaking inearly 2010
•Retail - Declining early stagedelinquencies should lead to lowerreserve build and losses peaking in early 2010
• Investment Bank - Taking share withinvestment spending in IT and fill-ins(Sempra) and as clients access its strongbalance sheet.
• TSS- Benefiting from volatility in capitalmarkets

Potential Catalysts
• Card NCO decline
• Continued reserve release
• Improving market share gains in capitalmarkets activities
• Efficiency improvements in higher marginconsumer loans

J.P.Morgan Chase _ Co.
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