JPMorgan Chase & Co. should get a boost from several tailwinds, enabling it to become the first bank to reach a $1 trillion market capitalization, according to Wells Fargo. Wells has an overweight rating on JPMorgan and recently hiked its price target on the stock to $390 from $375, implying more than 7% upside from Friday’s close. “JPM’s best-in-class ability to invest for superior growth can not only help JPM surpass the $1T [market] cap milestone but also to reach $2T over est. 7-8 [years],” analyst Mike Mayo said Thursday in a client report. “JPMorgan Chase … has excelled at both offense and defense over the past decade, in which it has been gaining market share in all major business lines, while optimizing its businesses, showing consistent earnings relative to other global banks, and creating a ‘fortress balance sheet’ (as defined by its CEO),” Mayo wrote. Shares of JPMorgan have risen 21% in the past three months as the bank has recorded record profits, largely due to a surge in trading and dealmaking. The Jamie Dimon-led bank closed Friday with a market value of $965 billion. $2 trillion Looking farther ahead, JPMorgan could reach a $2 trillion market capitalization in the next seven or eight years, particularly as it deepens its investments across a group of high-growth businesses, according to Wells Fargo. “Achieving $2T market cap requires more EPS growth than re-rating,” Mayo wrote, referring to the bank’s price-to-earnings ratio and other valuation yardsticks. “JPM’s flywheel is a self-funded loop that results in [Return on Tangible Common Equity] well above its cost of equity,” coupled with reinvestment of outsized returns in branches, bankers technology and the international business,” the analyst said. The bank then converts that spending into market share gains across deposits, credit cards, capital markets and banking. “JPM seeks growth in all areas, incl. Deposits.” Wells Fargo’s call matches the Wall Street consensus. Fifteen of 26 analysts covering JPMorgan rate it a buy or strong buy, LSEG data shows.
