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On Tuesday, Deutsche Bank<\/a> analyst Matt O\u2019Connor downgraded the Wall Street giant\u2019s stock from a buy to a hold rating. The reason: The company had done so well over the past year there was nowhere left for it to go. There is \u201cless upside to JPM in the near\/medium term as a lot of good news seems priced in,\u201d O\u2019Connor wrote in a note published Tuesday.\u00a0<\/p>\n The stock has had a stellar<\/a> 2024 so far. JPMorgan\u2019s stock is up 30%, far outpacing the 18% of the BKX, the index that tracks the major banks, and a raft of its competitors.\u00a0<\/p>\n Some of JPMorgan\u2019s rivals are also having good years: Wells Fargo<\/a> is up 19%, Bank of America<\/a> is up 20%, and even the embattled<\/a> Citigroup<\/a>, in the midst of a nearly total turnaround<\/a>, is up 16%.\u00a0<\/p>\n But none have matched JPMorgan, which under the leadership of Wall Street\u2019s \u00e9minence grise, Jamie Dimon<\/a>, has thrived. Much of the bank\u2019s success is due to its strong net interest income (the difference between how much a bank makes in interest and how much it has to pay in interest), high investment banking fees, and its sprawling consumer banking segment, none of which went unnoticed by O\u2019Connor.\u00a0<\/p>\n \u201cJPM\u2019s strong capital generation and execution have made shares a good stock to own over time,\u201d he wrote.\u00a0<\/p>\n But as the saying goes, all good things must come to an end. JPMorgan\u2019s plum net interest income\u2014$22.9 billion in the second quarter\u2014will take a hit as the Fed lowers interest rates, as it\u2019s widely expected to do<\/a> later this month, according to O\u2019Connor. The bank also faces broader challenges like \u201ccontinued sluggish industry-wide loan growth,\u201d he wrote.\u00a0<\/p>\n O\u2019Connor called 2025 a \u201ctransition year from an earnings point of view,\u201d expecting flat earnings per share growth next year. He still maintained a $235 price target for JPMorgan, which, based on its current price of $222.23, assumes about a 5.7% upside\u2014enough to get a return but certainly not at the appetizing rate seen so far this year.\u00a0<\/p>\n JPMorgan did not immediately respond to a request for comment.<\/p>\n In the same note, O\u2019Connor upgraded JPMorgan\u2019s competitors Wells Fargo and Bank of America from a hold to a buy. Just as JPMorgan performed so strongly, leaving it little room for any further significant upside, the opposite can be said of its two rivals. A few blips on their otherwise upward trajectory made it a good moment to buy.\u00a0<\/p>\n Wells Fargo had a strong early part of the year before dropping 13% from $60.01 to $52.12 over a five-day span from July 30 to Aug. 5. Shares have since recovered to around $58.90 at the time of publication. For Deutsche Bank, that turbulence was a good opportunity. \u201cRecent weakness has created a better entry point in our view,\u201d O\u2019Connor wrote.\u00a0\u00a0<\/p>\n Meanwhile, Bank of America, which has had a strong year, has had a rocky few weeks after disclosures that Warren Buffett\u2019s Berkshire Hathaway<\/a> has sold<\/a> some $6.2 billion worth of shares, according to O\u2019Connor. Berkshire Hathaway started reducing its position<\/a> in Bank of America in mid-July. Over the time, the firm sold roughly 150 million shares of the bank, trimming its position by about 15%. But where Buffett cashed out with a sale, Deutsche Bank saw only an \u201cattractive valuation\u201d ripe for purchase.<\/p>\n<\/div>\nRecommended reading:<\/strong>
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