The market is about right about next year's earnings. Stronger interest income and durable customer growth justify moving from sell to hold, but investment spending and slower buybacks limit the opportunity. My twelve-month target is $320.24.
Key points
- $107 billion is my 2027 interest-income forecast outside trading, up from $103 billion.
- $115 billion remains my 2027 expense forecast, including continued investment.
- $320.24 a share is my twelve-month target, moving the rating to hold.
The call
The market is about right about earnings durability. At 13 times annual earnings, the verified price requires $25.57 a share. Holding my other assumptions constant, that requires approximately $110 billion of 2027 interest income outside trading. That is achievable, but above management's preliminary central case.
Growth is broad, but costs keep pace ($ billions)JPM Q3 supplement, October 13, 2026; managed revenue and total noninterest expense.
Growth deserves more credit than my earlier sell allowed. I now forecast $24.63 a share for 2027. Consumer deposit margins improved despite rising deposit costs, supporting the customer-growth story. January's budget and subsequent lending results should test whether investment produces profits. Slower buybacks prevent a larger earnings upgrade.
Valuation
| Our 2027 estimate or valuation input | Figure |
|---|
| Managed revenue, adjusted for tax-exempt income | $219 billion |
| Total annual expenses | $115 billion |
| Annual credit provisions, money reserved for losses | $13 billion |
| Diluted earnings per share | $24.63 |
| Customer-franchise premium per share | $24.63 |
| Twelve-month target per share | $320.24 |
Revenue combines $107 billion of interest outside trading, $43 billion of trading and $69 billion of other revenue. Earnings remove a $3 billion tax-reporting adjustment, apply a 24% reported tax rate, subtract $1.6 billion of preferred dividends and use 2.65 billion diluted shares.
The valuation adds one earnings-multiple turn to my previous 12 times for durable customer relationships; falling deposit margins would remove that premium. Higher rates support lending income but threaten credit and deal activity. Relative underperformance argues against paying more, while the franchise makes selling solely on valuation unattractive.
Interest growth decides the twelve-month outcomeOur 2027 scenarios, October 13, 2026; other assumptions fixed, valued at 13 times earnings.
Risks
- Deposit competition could erase growth benefits. Watch consumer deposit margins and account balances.
- Investment could outrun revenue. Watch the finalized 2027 budget and quarterly expense growth.
- Credit could weaken as rates stay restrictive. Watch card delinquencies and troubled wholesale loans.
What would change my mind
Recurring annual earnings above $27.50 a share by June 2027, without investment gains or reserve releases, would make my hold too cautious.