Categories: Invest

Should I buy JPMorgan shares ahead of third-quarter earnings results?

JPMorgan Chase & Co (NYSE: JPM) shares have advanced more than  6% since the beginning of September 2021, and the current share price stands at $170.22. JPMorgan is scheduled to announce third-quarter earnings results on Wednesday, October 13th, before the market opens, and according to estimates, JPMorgan should post strong earnings results.

JPMorgan should post strong Q3 results

JPMorgan will announce third-quarter earnings results next week, and according to Bank of America, the outlook for bank returns is significantly more favorable currently than even a few months ago. The main reason for this is that the credit quality continues to improve, and BofA reported on Friday it is generally expecting another quarter of credit-driven earnings-per-share beats.


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JPMorgan should report another strong quarter on the back of its equity raise in August, while Bank of America added:

JPMorgan also continues to offer an attractive risk/reward ratio, and the market seems willing to look past the company’s premium valuation and add exposure to the stock.

JPMorgan has proven its stability during the first half of the 2021 fiscal year, and it will probably have revenue growth and margin expansion in the upcoming quarters. JPMorgan’s second-quarter results were in line with the recovery in economic activity; total revenue has decreased less than 8% to $30.5 billion, while the GAAP EPS was $3.78 (beats by $0.60).

JPMorgan has recently joined the Net-Zero Banking Alliance to align its lending and investment portfolios with net-zero emissions by 2050 and announced it plans to report a 35% reduction in “operational carbon density” for its oil and gas portfolio by the end of the decade.

JPMorgan has a strong balance sheet, the current dividend yield stands around 2.35% and with the market capitalization of $508 billion, shares of this bank are reasonably valued. CEO Jamie Dimon said that the outlook for the rest of the year is promising and that the bank is prepared for higher rates and more inflation.

JPMorgan shares remain in a bull market

According to rules of technical analysis, JPMorgan shares remain in a bull market, and if the bank posts strong third-quarter earnings results on Wednesday, the share price could be above the current levels.

Data source: tradingview.com

The critical support levels are $160 and $150; $175 and $180 represent the current resistance levels. If the price jumps above $175, it would be a signal to trade JPMorgan shares, and the next target could be around $180 resistance.

On the other side, if the price falls below $160 support, it would be a strong “sell” signal, and the next target could be around $150.

Summary

JPMorgan is scheduled to announce third-quarter earnings results on Wednesday, October 13th, before the market opens, and according to Bank of America, JPMorgan shares continue to offer an attractive risk/reward ratio. If the price jumps above $175, it would be a signal to trade JPMorgan shares, and the next target could be around $180 resistance.

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