J.P. Morgan shares gain the most in two weeks on Tuesday, quarterly earnings top estimates as strength in consumer banking offsets drop in trading, investment banking revenue

J.P. Morgan Chase & Co’s second-quarter earnings, reported on Tuesday, exceeded Wall Street estimates, as loan growth and higher interest income more than compensated for lower revenue from market trading activities.

J.P. Morgan Chase shares closed higher for the tenth time in the past fourteen trading sessions in New York on Tuesday. It has also been the sharpest daily surge since July 1st. The stock went up 1.07% ($1.22) to $115.12, after touching an intraday high at $115.52 and an intraday low at $112.96.

Shares of J.P. Morgan Chase & Co have risen 17.93% so far in 2019 compared with a 19.83% gain for the benchmark index, S&P 500 (SPX).

In 2018, J.P. Morgan’s stock went down 8.72%, thus, it again underperformed the S&P 500, which registered a 6.24% loss.

J.P. Morgan’s total revenue went up 4% year-on-year to $29.57 billion during the quarter ended on June 30th. In comparison, analysts on average had anticipated revenue of $28.90 billion.

Net revenue at J.P. Morgans Consumer & Community Banking segment rose 11% year-on-year to $13.8 billion during the past quarter.

The group’s consumer banking division reported an annual loan growth of 2% during the second quarter, driven by an 8% surge in credit card loans. Deposit base at the unit grew 3% year-on-year.

Net revenue at J.P. Morgans Corporate & Investment Bank segment, on the other hand, registered a 3% annual drop to $9.6 billion during the quarter.

Fixed income trading revenue went down 3% year-on-year due to relative weakness in Europe, the Middle East and Africa across products, the bank said.

Revenue from equity trading operations shrank 12% from a year ago to $1.7 billion, mostly due to lower client activity in derivatives.

J.P. Morgans investment banking revenue decreased 9% year-on-year to $1.8 billion during the quarter as a result of lower fees across products.

Net revenue at the banks Asset & Wealth Management segment remained relatively flat from a year earlier at $3.6 billion, since the effect of higher average market levels was offset by lower investment valuation gains.

Meanwhile, net income attributable to shareholders went up 16% year-on-year to $9.65 billion (or $2.82 per share) during the second quarter and included income tax benefits of $768 million.

Excluding these benefits, the banks earnings per share were reported at $2.59 during the past quarter. In comparison, the median analyst estimate had pointed to adjusted earnings of $2.50 per share.

J.P. Morgan’s net interest income increased 7% year-on-year to $14.5 billion, supported by balance sheet growth and mix, as well as by the impact of higher interest rates.

Analyst stock price forecast and recommendation

According to CNN Money, the 25 analysts, offering 12-month forecasts regarding J.P. Morgan Chase & Co’s stock price, have a median target of $120.00, with a high estimate of $141.00 and a low estimate of $85.00. The median estimate represents a 4.24% upside compared to the closing price of $115.12 on July 16th.

The same media also reported that at least 13 out of 28 surveyed investment analysts had rated J.P. Morgan Chase & Co’s stock as “Hold”, while other 13 – as “Buy”. On the other hand, 1 analyst had recommended selling the stock.

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