JPMorgan Chase & Co. (JPM:US) was cut to hold by Deutsche Bank AG analysts who said regulators may not let the company resume its stock-repurchase program this year after a trading loss of at least $5.8 billion.
Earnings expectations may be too high and Federal Reserve approval for meaningful buybacks through the first quarter of 2013 “is unlikely,” Matt O’Connor and David Ho wrote in a July 29 research note. The analysts said they met with Chief Financial Officer Doug Braunstein on July 27 after the company announced a shakeup in senior management.
JPMorgan, the largest U.S. bank by assets, also faces “uncertain” legal ramifications stemming from its trading loss as well as the global investigation into manipulation of interest rates, the analysts said.
O’Connor and Ho cut their recommendation on the shares from buy to hold and lowered the New York bank’s price target to $40 from $43 a share. JPMorgan has fallen 18 percent, to $36.21, in New York trading since Bloomberg News reported on April 5 that a London unit had amassed a large and illiquid portfolio.
The shares fell 1.7 percent at 11:34 a.m. in New York, the biggest decline on the 24-company KBW Bank Index.
To contact the reporter on this story: Dawn Kopecki in New York at email@example.com
To contact the editor responsible for this story: David Scheer at firstname.lastname@example.org