Eyes on the banks and in particular on JPMorgan Chase, Wells Fargo, BlackRock e Citigroup which tomorrow will kick off the season of first quarter quarterly accounts in the United States.
The accounts of these big four companies will be closely monitored by investors, who are eager to see how America’s major financial firms responded to the regional banking crisis in early March, when the Silicon Valley Bank.
Uncertainty in financial markets now appears to have eased, as has panic among account holders, with major US investment banks expected to post strong interest margins and solid lending despite the recent turmoil.
Against this background let’s take a closer look at the analyst consensus estimates for each of these banking giants, analyzing what is expected in terms of revenues, earnings and EPS compared to previous quarters.
Overview of bank accounts
JPMorgan Chase, Wells Fargo, BlackRock and Citigroup are the four largest financial institutions in the United States and have combined market capitalization of more than $700 billion. We note that these four banks account for approximately 15% of the Financial Select Sector SPDR Fundthe benchmark for the US financial sector.
Consequently, given the importance of these four banking giants, it is expected that the whole financial sector, but perhaps also the broader market (S&P 500), could experience significant price movements, with a increase in volatility.
JPMorgan Chase
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Wall Street analysts estimate for JPMorgan a earnings per share (EPS) of $3.34 per share in the first quarter. This would imply a decline from the prior quarter’s reported EPS of $3.57, but an increase from the first quarter of 2022 when JPMorgan’s EPS was $2.63.
In the previous two quarters, JPMorgan outperformed analyst earnings estimates, by 8% in the third quarter of 2022 and by 16% in the fourth quarter of 2022.
Revenue
In the first quarter of 2023, analysts expect a quarterly revenue of $36.8 billiona figure that would mark the company’s best quarterly revenue, an increase of nearly $1.5 billion over the fourth quarter of 2022 and $5.5 billion over the first quarter of 2022.
JPMorgan’s revenue from loan and deposit fees is also expected to decline 2.6% to $1.79 billion.
Finally, it is estimated that the total assets of the bank will decrease by 7.9% to 3.64 trillion dollars, while i average deposits will drop by 7.3% to 2.34 trillion dollars, while average loans will increase by 6.2% to 1.13 trillion dollars.
Price targets
JPMorgan Chase stock is currently trading at $128, and is down -4.18% year-to-date.
Looking at the view on the title, from the data collected by Bloomberg, we see how the how the most analysts (20) give a “Buy” indicationin 9 say they keep in portfolio (“Hold”), while no one has a “Sell” view on the stock.
The average 12-month target price is $150.8, which implies a potential return of 17.4%.
“the banking crisis is not over”
However, in its latest annual shareholder letter, Jamie Dimon, the CEO of JPMorgan stated that “the banking crisis is not over yet“, and that there will be “repercussions for years to come“. Precisely for this reason, the largest bank in America intends to modify its operations “in order to continue to be successful”.
In this sense, JPMorgan would intend “reduce clients’ non-operating cash deposits while implementing more stringent management and execution strategies“. This could necessarily include repricing some assets, but also managing unprofitable products and changing business mixes, as well as more rigorous customer pricing.
Finally, Dimon also hinted at a potential reduction of JPMorgan’s mortgage business.
Technical analysis
The stock is consolidating the $130 per share area (main short-term support for the stock) and is slightly above the 200-period moving average.
Wells Fargo
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In the first quarter of 2023, Wall Street analysts estimate for Wells Fargo earnings per share (EPS) of $1.16. This would imply a sharp increase in EPS (+28%) from both the previous quarter’s reported $0.85, and last year’s Q1 EPS when it stood at $0.88. Recall that in the fourth quarter of 2022 Wells Fargo surprised analysts’ earnings expectations by 14%.
Revenue
I Wells Fargo’s quarterly revenues are estimated at $20.1 billion, an increase of 14.4%. This result it would mark the company’s best quarterly revenue since the fourth quarter of 2021 (2 years), an increase of $500 million over Q4 2022 and $2.5 billion over Q1 2022.
For Wells Fargo, analysts also estimate that the net interest income will rise nearly 42% to $13.09 billion. However, total assets are seen down 2.6% to $1.881 trillion. FactSet expects i average loans will increase by 6% to 952 billion dollars, while i average deposits will drop by 5.5% to 1.383 trillion dollars.
Price targets
Right now, Wells Fargo stock is trading at $39.19, and is down -5.08% year-to-date.
Looking at the view on the title, from the data collected by Bloomberg, we see how the how the most analysts (21) give a “Buy” indicationin 7 say they keep in portfolio (“Hold”), while no one has a “Sell” view on the stock.
The average 12-month target price is $48.8, which implies a potential return of 24.8%.
Technical analysis
After bouncing off the support at $36, Wells Fargo shares are now close to the resistance at $40 a share. However, the weakness phase of the stock can also be observed from the position of the moving averages with the stock being below the main ones at 50 and 200 periods.
BlackRock
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Analysts for BlackRock are forecasting for the first quarter of this year an EPS of $7.44 (a figure revised downwards in recent weeks). This result would imply a slowdown compared to both the prior quarter’s reported EPS of $8.93 and last year’s first quarter earnings per share (EPS) of $9.52 per share.
Recall that in the previous two quarters, BlackRock beat analysts’ earnings expectations by 35.2% in the third quarter of 2022, and by 9.9% in the fourth quarter of 2022.
Revenue
For BlackRock, Wall Street analysts estimate quarterly revenues at $4.25 billiona decrease from Q4 2022 revenue of $4.34 billion, but also from Q1 2022 revenue of $4.7 billion.
Price targets
Right now, BlackRock stock is trading at $665.9, and is down -6.02% year-to-date.
Looking at the view on the title, from the data collected by Bloomberg, we see how the how the most analysts (15) give a “Buy” indicationin 7 say they keep in portfolio (“Hold”), while no one has a “Sell” view on the stock.
The average 12-month target price is $764, which implies a potential return of 14.8%.
Technical analysis
BlackRock stock is near the major 50- and 200-period moving averages. Thus, exceeding these resistance levels with trading volumes could push the stock towards the next resistance at 700-720 dollars.
Citigroup
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For Citigroup, analysts estimate that Citigroup earnings will decline for the sixth consecutive quarter to record in the first quarter of 2023 earnings per share of $1.65and this would imply a increase over the EPS recorded in the previous quarter of $1.16, but a slowdown from last year’s first quarter EPS when it settled at $2.02.
Recall that in the previous eight quarters, Citigroup has consistently outperformed analysts’ earnings expectations, so much so that in the third quarter of 2022, the company exceeded EPS estimates by more than 14%.
Revenue
Citigroup’s quarterly revenues are estimated at nearly $20.06 billion (+3.6%). This result would score the best quarterly revenue ever for the companywith a $2 billion increase from the fourth quarter of 2022 and by $0.7 billion compared to the first quarter of 2022.
Additionally, FactSet estimates estimate that the net interest income should rise by 18% to 12.86 billion of dollars. Furthermore, analysts estimate that the total assets increase 1.4% to $2.43 trillionwhile i average loans are estimated at 653.9 million of dollars, with i average deposits expected to increase by 3.5% to $1.37 billion.
Price targets
Currently, Citigroup stock is trading at $46.9, up 3.74% year-to-date.
Looking at the view on the title, from the data collected by Bloomberg, we see how the how the most analysts (10) give a “Buy” indication17 say they keep in portfolio (“Hold”), while only 1 has a “Sell” view on the stock.
The average 12-month target price is $55, which implies a potential return of 17.8%.
Technical analysis
Citigroup stock is below the main 50- and 200-period moving averages, while the main support has been identified at $43 a share.
Next on the calendar
Next week it will be the turn of Bank of America, Goldman Sachs, Morgan Stanley e Charles Schwab.
Meanwhile, on Friday the Federal Reserve in the week ending March 29, commercial bank deposits decreased by $64.7 billionscoring 10 consecutive weeks of decline.