JPMorgan In Focus As Baird Downgrades Shares On Valuation Concerns: ‘Makes Sense To Sell The Stock’

JPMorgan Chase & Co ($JPM) shares were in focus on Thursday morning after Baird downgraded the stock to ‘Underperform’ from ‘Neutral’ while maintaining a price target of $200.

According to a CNBC report, Baird analyst David George believes the stock has a poor risk-reward profile and is expensive at current levels.

“We find that expectations are quite high, with the stock trading at ~2.6x [tangible book value], 15% cap to assets, over 14x 2026 [earnings per share] estimates, and ~10x [pre-provision net revenue] – all close or at all-time highs,” he wrote, according to the report.

Bank stocks rallied on Wednesday after Donald Trump’s victory in the U.S. Presidential elections as traders factored-in a less stricter financial regulatory environment. Banks have been asking for less stringent regulation with lower capital requirements.

Earlier this year, Wall Street lenders won a small victory when the extra capital requirement was brought down by regulators in September. Shares of JPMorgan closed over 11% higher on Wednesday.

Baird analyst George, however, believes the good times may be over. “We know we are fighting the tape here, but believe it makes sense to sell the stock,” the Baird analyst wrote.

He also noted that under the second Trump administration, the lender is unlikely to grow its buyback program.

“While a more bank-friendly regulatory environment should lead to a greater opportunity for outsized capital return in the near-term, we don’t expect JPM to aggressively buy back its stock here,” he said.

Meanwhile, a Reuters report cited a source saying JPMorgan Chase CEO Jamie Dimon will continue at the bank and has no plans to join the Trump administration. The report comes at a time when there is high speculation regarding Dimon taking on a senior government role.

On Stocktwits, one user with a bearish outlook believes JPMorgan stock should hit the $240 mark.

JPMorgan shares have gained over 43% since the beginning of the year, significantly outperforming the benchmark U.S. indices in the period.

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