JPMorgan reports before the bell Friday. What Wall Street is watching

Published Thu, Jul 11 20241:36 PM EDTUpdated Thu, Jul 11 20242:16 PM EDT

The unofficial start of the second-quarter earnings season kicks off Friday with results from banking giants including JPMorgan Chase . Analysts polled by LSEG expect the financial behemoth to report earnings of $4.18 per share on $42.16 billion in revenue. Along with the top- and bottom-line numbers, Wall Street is also keeping close watch on net interest income and guidance. "We are attracted to JPM's competitive position and believe it has addressed a great deal of its litigation concerns," said Barclays analyst Jason Goldberg. "We see the greatest sources of potential earnings upside being driven by higher loan growth and capital markets." JPM YTD mountain Shares in 2024 Shares of JPMorgan have fared well in 2024, rising 22%. The bank's CEO Jamie Dimon has also made headlines in recent months, warning in April that sticky inflation , wars and the Federal Reserve's policy pose potential major threats ahead. Analysts will monitor JPMorgan's 2024 outlook, particularly the trajectory for net interest income given the expectations for a higher-for-longer rate environment, noted Goldman Sachs analyst Richard Ramsden. Earlier this year, the company guided for $91 billion in net interest income, but another upgrade is not out of the question, according to Bank of America's Ebrahim Poonawala. The firm holds a $226 price target on the stock, suggesting nearly 9% upside from Wednesday's close. Barclays analyst Goldberg anticipates a slight decrease in net interest income in the second quarter due to a compression in net interest margin. Last year, the company posted $21.9 billion in net interest income for the period. Despite expectations for seasonally lower trading, he also expects strong investment banking activity and net interest income to drive ongoing positive momentum. "Looking out, we expect JPM to point toward stabilizing NII in 2024 with increased expenses on continued investments," he said. "Still, further loan loss reserve build is likely as credit normalizes." Wells Fargo analyst Mike Mayo expects realized Visa gains to provide upside to second-quarter earnings per share estimates, resulting in an $8 billion pretax gain that is partially offset by a $1 billion foundation contribution and building loan loss reserves. This could yield "excess capital to be used for buybacks, balance sheet growth, securities portfolio clean-up or other action," he added, estimating a buyback of about $5 billion over the next couple of quarters. "JPMorgan is a highly diversified bank and a market leader in consumer banking, commercial lending, IB and wealth management," said Redburn Atlantic's John Heagerty. "JPMorgan is simply regarded as the highest quality bank in the United States." He views the uncertain macroeconomic backdrop as a potential opportunity for the company to harness its strong balance sheet to acquire smaller banks.