JPMorgan could reach US$1 trillion market value by 2030, Morgan Stanley says

JPMORGAN Chase’s market capitalisation has a chance to more than double and hit US$1 trillion by 2030, according to Morgan Stanley analysts, reinforcing its position as the most valuable US bank.

In the event of a so-called soft landing for the economy where interest rates stay higher for longer, America’s biggest lender stands to benefit from stronger net interest income, plus improved fees and efficiencies, Morgan Stanley’s Betsy Graseck wrote in a note. The stock is “an underappreciated rate play,” she said.

Graseck sees the US$1 trillion market-value landmark being reached in 12 years’ time if interest rates remain elevated, but says it could get there in eight if the bank takes steps to become more efficient, accelerates revenue growth or achieves a premium earnings multiple. JPMorgan is currently valued at US$410 billion after a 4 per cent gain in the stock so far this year.

Shares of the lender were little changed as of 9.57 am New York time on Friday (Feb 24), putting the stock on track to close lower by nearly 2 per cent this week. Meanwhile, the KBW Bank Index lost as much as 1.3 per cent, on pace for its third straight weekly decline.

A market value of US$1 trillion would put JPMorgan in elite company, not only among its US peers, but globally. Only four stocks – Apple, Microsoft, Saudi Aramco and Alphabet – currently sport valuations that exceed that level. PetroChina briefly became the first publicly traded stock to clear the US$1 trillion milestone back in 2007, while Apple became the first US stock to do it in 2018.

Graseck’s optimism contrasts with often cautious comments from JPMorgan’s chief executive officer Jamie Dimon, who said on Thursday that the economy has “some scary stuff” to face. The bank said last month that it expects an economic slowdown to weigh on net interest income this year.

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Her price target on the stock, which she boosted to US$173 from US$167, implies a 24 per cent gain over the next 12 months from Thursday’s close. That’s nearly double the average annual move that JPMorgan shares have seen over the last decade and would put the stock at a fresh all-time high. BLOOMBERG