What Was This Analyst's Quick Reaction To Wells Fargo And JPMorgan Q4 Earnings?

While any potential weakness with JPMorgan Chase & Co’s JPM stock over the next few days would represent a buying opportunity, while Wells Fargo & Co.’s WFC stock could benefit from “some rotation out of JPM, at least in the near term,” according to BofA Securities.

BofA On JPMorgan Earnings

Ebrahim Poonawala reiterated a Buy rating for JPMorgan Chase, while maintaining the price target at $200.

“JPM reported core 4Q21 EPS of $3.28 (ex. gain on equity investments), beating our/consensus est. of $2.92/$2.99, respectively, primarily driven by a $1.3bn reserve release. Pre-provision net revenue came in-line with our est. and slightly better than cons,” the analyst wrote.

“Spread revenue guide (bakes-in forward curve), implied ~$56-58bn (investment banking spread income a wildcard) is also ahead of our/cons $56.5bn/$56.1bn forecast,” he added.

Although management’s discussions around the company’s investment may not be enough to “reverse the negative stock reaction today,” shareholders may become increasingly comfortable about JPMorgan being “well-positioned to effectively compete in a fast-evolving digital banking landscape,” Poonawala mentioned.

BofA On Wells Fargo Earnings

Analyst Poonawala maintained a Buy rating for Wells Fargo and named the stock as a Top Pick, while keeping the price target unchanged at $70.

“WFC reported 4Q21 EPS of $1.25 (ex. $0.18 gain from business exits; $0.05 impairment charge) vs. our/cons $0.91/$1.02 estimates with the beat to our forecast driven by higher pre-provision net revenue,” the analyst wrote.

“The expense guide and mgmt’s commentary for increased cost-saving opportunities positions WFC as a rare expense story in the large-cap banks universe. Add to that the bank remains well-positioned to benefit from cyclical tailwinds driven by higher interest rates and rebounding loan demand” he added.

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