Understanding JPMorgan’s Risk Factors

JPMorgan Chase (JPM) provides banking services and financial and investment products. Based in New York, the company was founded in 1968.

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For Q4 2021, JPMorgan’s revenue rose a modest 1% year-over-year to $30.3 billion and surpassed the consensus estimate of $29.9 billion. It posted EPS of $3.33, which declined from $3.79 in the same quarter the previous year but still beat the consensus estimate of $3.01.

JPMorgan stock currently offers a dividend yield of 2.5%, compared to the sector average of 1.68%.

JPMorgan continues to seek new ways to expand its business. As part of an expansion of its payment solutions business, the company has agreed to acquire an approximate 49% stake in Viva Wallet. Greece-based Viva Wallet offers a cloud-based payments platform for merchants in Europe.

The Viva deal follows JPMorgan’s announcement of a plan to acquire a controlling stake of about 75% in automaker Volkswagen’s (VWAGY) payments unit. It expects the Volkswagen deal to extend the reach of its payments business into the auto industry.

With this in mind, we used TipRanks to take a look at the risk factors for JPMorgan.

Risk Factors

According to the new TipRanks Risk Factors tool, JPMorgan’s top risk category is Finance and Corporate, with 17 out of the total 47 risks identified for the stock. Macro and Political and Legal and Regulatory are the next two major risk categories with 12 and 11 risks, respectively.

In an updated Macro and Political risk factor, JPMorgan discusses the potential adverse effects on its business stemming from the COVID-19 pandemic. It explains that the adverse economic impact of the pandemic has resulted in reduced demand for some of its products, leading to lower revenue.

It further cautions that an outbreak of additional variants of COVID-19 could further disrupt its business and harm its financial condition. For example, JPMorgan mentions that it could be forced to halt certain actions if a significant portion of its workforce gets sick with the disease and are unable to work.

Additionally, JPMorgan cautions that its participation in government programs related to supporting individuals and businesses economically impacted by the COVID-19 pandemic could expose it to criticism and damage its reputation. Further, participation in such programs could expose the company to increased regulatory scrutiny and lawsuits, which could, in turn, increase its legal and compliance costs.

JPMorgan’s stock has gained about 15% over the past 12 months.

Analysts’ Take

RBC Capital analyst Gerard Cassidy recently reiterated a Buy rating on JPMorgan stock with a price target of $175, which implies 17.69% upside potential.

Consensus among analysts is a Moderate Buy based on 9 Buys, 8 Holds, and 1 Sell. The average JPMorgan Chase price target of $176.33 implies 18.59% upside potential to current levels.

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