JPMorgan Chase & Co. (JPM) maintains earnings power in the face of near-term legislative obstacles due to the renewed focus of Congress on the issue of “too big to fail” financial firms, says Eric Wasserstrom, Managing Director at SunTrust Robinson Humphrey.
“[I’m] recommending JPMorgan, largely on the view — which I think they recently reaffirmed on their investor day a couple of weeks ago — about the strength of the earnings power at that organization, which I think points to run rate earnings north of $6 in the next couple of years. I think it’s a very powerful earnings story,” Wasserstrom said.
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Wasserstrom says the renewed interest in the regulation of large financial firms by the legislative branch is not expected to result in large business shifts at JPM, and the shorter-term share weakness due to these worries leads him to think the money center bank currently presents investors with an entry opportunity.
“In the near term, I think they are obviously a bit more in the legislative cross hairs than some others. I doubt that’s going to have any meaningful longer-term business model impact, but it could certainly create some volatility in the share performance, so that’s a name where I am clearly a buyer on weakness,” Wasserstrom said.
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