U.S. banking giant JPMorgan Chase (JPM) is set to release its third quarter 2024 financials on October 11. Wall Street analysts anticipate a decline in both revenue and earnings for Q3 due to current economic challenges. They expect the company to report earnings of $3.99 per share, representing a 7.9% decrease year-over-year. Additionally, revenues are expected to fall by 33% from the year-ago quarter to $41.4 billion, according to data from TipRanks.
In its last reported second quarter, JPM reported impressive revenue of $50.2 billion, up 21% from the previous year, beating forecasts by $4.54 billion. A key highlight was JPM’s net interest income (NII), which reached $22.9 billion, a major improvement from the second quarter of 2023.
As we head into Q3, it’s important to consider the potential impact of falling interest rates. Like other banks, JPMorgan could see its NII decline, as lower rates reduce what the bank earns on loans. It should be noted that NII represents the difference between interest earned on loans and what the bank pays out on deposits.
Other Factors to Consider Ahead of Q3
In addition to the potential NII weakness, other factors to watch include sluggish loan growth and rising expenses. JPM’s President Daniel Pinto mentioned that JPM’s expenses might exceed the earlier $93.7 billion projection due to inflation and continued investments. While these factors present challenges, JPMorgan is a diversified financial giant, well-equipped to navigate reduced NII more effectively than smaller banks.
On a positive note, JPMorgan’s broad reach and commitment to underserved communities, with over 300 community-center branches, continue to strengthen its position. Moreover, according to TipRanks’ Bulls Say, Bears Say tool, analysts remain optimistic, expecting that market NII could rise to $2 billion as the Fed cuts rates, offering hope for future recovery.
Options Traders Anticipate a Minor Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 3.70% move in either direction.
What Is the Price Target for JPM?
Turning to Wall Street, JPM stock has a Moderate Buy consensus rating based on 13 Buys and five Holds assigned in the last three months. At $224.68, the average JPMorgan price target implies a 6.52% upside potential. Shares of the company have gained 26.97% year-to-date.
