JPMorgan Chase (JPM) has outperformed most other financial companies during the downturn, but the company faces too many headwinds int he next year to continue recommending it as a Buy, Sterne Agee analyst Todd Hagerman wrote in a note today downgrading his rating to Neutral.
“While JPMorgan was a clear winner through the financial downturn, the slowing global economy, ongoing regulatory reform and associated structural changes in the underlying business model, as well as the persistent uncertainty surrounding capital will continue to weigh on the shares of JPM in 2012.”
Hagerman wrote that he continues “to view JPM as one of the premier global commercial banks,” but that may not shield it from the challenges it will face.
“The concern, however, is that management has offered a more subdued outlook for credit, reserves, and capital redeployment going forward as the slowing global economy, volatile markets, onerous capital rules, and sweeping structural changes tied to regulatory reform only serve to increase uncertainty and aversion to risk.”
Hagerman’s price target is $36. Shares traded at $32.02 this afternoon, down 0.6%.
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