What Does JPMorgan's Earnings Beat Mean For Regional Bank Stocks? Analyst Says Not Much

JPMorgan Chase & Co JPM shares traded higher by 7.5% on Friday morning following a big first-quarter earnings beat, but Bank of America analyst Ebrahim Poonawala said Friday that investors shouldn't necessarily extrapolate JPMorgan's success to U.S. regional banks.

The Numbers: JPMorgan reported adjusted EPS of $4.32 on revenue of $39.34 billion. Both numbers topped consensus estimates of $3.41 and $36.19 billion, respectively. Revenue was up 25% from a year ago, and net interest income jumped 49% year-over-year to $20.8 billion. JPMorgan also raised its full-year 2023 NII guidance by $7 billion to $81 billion.

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Why It's Important: Poonawala said it's no surprise JPMorgan shares are reactive positively given the bank's NII guidance hike and its capital build, which should reassure investors that JPMorgan is a safe investment even in a banking downturn.

Poonawala also said investors should be careful not to make overly optimistic assumptions about other banks' NII based on JPMorgan's numbers. In fact, Wells Fargo & Co WFC left its 2023 NII guidance unchanged on Friday. Meanwhile, PNC Financial Services Group Inc PNC cut its fiscal 2023 revenue guidance on Friday after first-quarter NII came up short of consensus expectations.

"At first blush results from the three banks imply the potential for deterioration in NII outlooks for the regional banks, but it may be less bad vs. what the stocks may have discounted during last month’s sell-off," Poonawala said.

Bank of America has a Buy rating and a $152 price target for JPM stock.

Benzinga's Take: The market seems to agree with Poonawala's initial take that JPMorgan's big numbers won't necessarily translate to a big first quarter from U.S. regional banks. The SPDR S&P Regional Banking ETF KRE traded lower by 0.9% on Friday following the first batch of bank earnings reports.

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