Can JPMorgan Stock Gain 30% Post Covid?

by Trefis Team
JPMorgan Chase
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JPMorgan’s stock (NYSE: JPM) has rallied 27% since March 23 (vs. around a 45% gain in the S&P 500) to its current level of $99 after falling to a low of $78 in late March as a rapid increase in the number Covid-19 cases outside China resulted in heightened worries of an imminent global economic downturn. But the stock remains 27% below the $136 peak it reached in mid-February, and we believe it can partially recover to the $129 level (30% upside) once fears surrounding the coronavirus outbreak are put to rest. Our conclusion is based on our detailed comparison of JPMorgan’s stock performance during the current crisis with that during the 2008 recession in an interactive dashboard analysis.

How Did JPMorgan Stock Fare During The 2008 Downturn And What Does It Mean For The Stock This Time Around?

We see JPM stock declined from levels of around $34 in October 2007 (the pre-crisis peak) to roughly $18 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 48% of its value from its approximate pre-crisis peak. This marked a slightly lower drop than the broader S&P, which fell by about 51%.

However, JPM recovered strongly post the 2008 crisis to about $32 in early 2010 – rising by 83% between March 2009 and January 2010. On the other hand, the S&P bounced back by about 48% over the same period.

In comparison, JPM stock lost 43% of its value between the market peak on February 19 to the low on March 23 and has already recovered 27% since then. Keeping in mind the trajectory over 2009-10, this suggests a potential recovery to around $129 (30% upside) once economic conditions begin to show signs of improving. This marks a partial recovery to the $136 level JPM stock was at before the coronavirus outbreak gained global momentum.

But When Can We Expect This Recovery In JPMorgan Stock?

The rally across industries over recent weeks can primarily be attributed to the Fed stimulus which put investor concerns about the near-term survival of companies to rest. The gradual lifting of lockdowns globally has also helped the demand for some non-essential goods recover. Over the coming weeks, we expect continued improvement in demand and subdued growth in the number of new Covid-19 cases in the U.S. to buoy market expectations. While Q2 results were strong due to positive growth in sales & trading and investment banking divisions, we believe that the Q3 results will be weak. However, investors will focus their attention on 2021 results – helping JPMorgan stock trend higher over the latter half of the year. More details about JPMorgan’s revenues and our forecast for FY2020 and FY2021 are available in our interactive dashboard.

While JPMorgan’s stock presents significant upside potential, looking for outsized outperformance? Here is a shortlist of 4 companies that beat the S&P 500, every single year, year after year, for the last 10 years.


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