J.P. Morgan Chase Downgraded, As Stock's Relative Strength Leaves It Little Upside

J.P. Morgan Chase & Co.'s stock has done too well for Bernstein Research analyst John McDonald to stay bullish. He downgraded the banking giant to market perform from outperform, saying the stock price's strength relative to its peers, and its approach to his target of $67, leaves "insufficient upside over the next 6-12 months" to maintain a bullish rating. His price target is just 1.2% above current levels. McDonald said the shares have now approached their historical price-to-earnings valuations, while many other bank stocks continue to trade at a discount. "In the absence a clear macro catalyst--either hope for higher [interest] rates or fear of deteriorating credit--we see the best value in names trading at a deep discount and/or with some self-help levers," McDonald wrote in a note to clients. The stocks he covers trading at the deepest discounts are Bank of America Corp. and Citigroup Inc. . J.P. Morgan's stock has lost 3% over the past 12 months, while shares of Bank of America have lost 15% and Citigroup have dropped 19%. The SPDR Financial ETF has shed 5% while the S&P 500 had gained 4.2%. Other banks McDonald downgraded because of valuation were Regions Financial Corp. and SunTrust Banks Inc. , both to market perform from outperform.

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