JP Morgan (NYSE: JPM ) takes a smart approach to leveraged deals | Jobi Cool


In a world where macroeconomic uncertainty has investors worried, even big investment banks like JP Morgan Chase (NYSE: JPM) have taken calculated risks to avoid massive losses.

According to a The Wall Street Journal report, the investment bank has stayed miles away from risky corporate deals like the Twitter deal that led to huge losses for peer banks.

On Oct. 14, JPM reported third-quarter results, with both revenue and earnings beating analysts’ estimates.

Along with the earnings, JPM CEO Jamie Dimon said the bank has carefully kept exposure to leveraged loans or acquisition loans very low. Likewise, the company did not announce leveraged loan write-downs in the quarterly results.

In contrast, its peers, including Bank of America (NYSE: BAC), Goldman Sachs Group Inc. (NYSE:GS), and Morgan Stanley (NYSE:MS) have supported large takeover deals. The valuation of their leveraged loans took a hit due to the rise in interest rates, which led to a cautious outlook on deals.

Is JPM a buy today?

According to TipRanks, analysts are cautiously optimistic about the stock and have a medium buy consensus rating, based on seven buys, three holds and one sell. JPM’s average price forecast of 138.55, indicating a 2.4% upside from current levels.

In particular, JPM stock has a the highest quality smart score with a “Perfect 10” on TipRanks, indicating that the stock has a high potential to outperform market expectations. Furthermore, JPM stock has very positive signals from hedge fund managers, who added 8.4 million shares in the last quarter.

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