JPMorgan Chase & Co. (NYSE:JPM) is not pulling back in the wake of economic uncertainty, according to a new report from Goldman Sachs Group, Inc. (NYSE:GS). While several other investment banks are currently trying to reduce their exposure, JPMorgan is continuing to expand its portfolio, which should be a source of growth going forward.
The report, authored by analysts Richard Ramsden, Ryan M. Nash, Daniel Paris, and Conor Fitzgerald, puts a price target of $52 on the investment bank's shares with a buy rating. The firm's shares closed Monday January 28 at $46.64, and are up by more than 25 percent in the last twelve months.
Because JPMorgan Chase & Co. (NYSE:JPM) is intent in expanding its portfolio, at the expense of its rivals, there are many opportunities it can take advantage of that may lead to greater returns in the coming year, and further into the future. One such opportunity is the Fixed Income Currency and Commodities business.
While other major players in that business are expected to reduce their involvement, JPMorgan remains committed. The Goldman Sachs Group, Inc. (NYSE:GS) report expects this change to be permanent, as Basel III rules become implemented. JPMorgan, unlike many major competitors, already trades on the basis of the Basel III, meaning the pull back will deliver opportunities to them directly.
A second opportunity exists in the mortgage market. JPMorgan currently controls around 10 percent of that market, but its target is 15 percent. The chart below shows the percentage of the market held by each of the major banks. JPMorgan's 15-percent target is achievable, according to the report, and an opportunity exists for the large scale purchase of mortgages, such as the recent purchase from Metlife Inc (NYSE:MET).
JPMorgan Chase & Co. (NYSE:JPM) is the only major U.S. bank heading toward meeting Basel III requirements by the end of 2013. That's one of the firm's greatest strengths, allowing it to send more capital into the markets, rather than using it to shore up its balance sheet. The only American banks performing better are Morgan Stanley (NYSE:MS) and Bank of America Corp (NYSE:BAC), as can be seen in the chart below.