JPMorgan Chase & Co. (JPM) is winning higher ratings from analysts than Apple Inc. (AAPL), the iPad maker that doubled since its low last year, after the European debt crisis battered the U.S. bank’s shares.
The two companies are among 15 in the Standard & Poor’s 1500 Composite where “buy” recommendations made up 85 percent of analyst ratings and there were no “sells,” data compiled by Bloomberg Rankings as of Oct. 24 show. Stocks with fewer than 15 analysts covering them were excluded. For JPMorgan, the total was 89.5 percent, compared with 87.5 percent at Apple.
JPMorgan shares are lagging behind the Standard & Poor’s 500 Index by 15 percentage points this year after investors sold banks amid concern the European crisis would prompt losses. Following its decline, no other financial institution in the U.S. has more support from analysts.
“It shouldn’t be beaten up,” Jeff Harte, a Chicago-based financial analyst at Sandler O’Neill & Partners LP, said in a telephone interview on Oct. 26. During the last financial crisis in 2008, JPMorgan “capitalized on others’ weakness.”
JPMorgan, based in New York, topped Bank of America Corp. as the biggest U.S. lender by assets as of Sept. 30 and posted more trading revenue than any other Wall Street firm for the fourth straight quarter.
The company was profitable every quarter during 2007 and 2008 as the collapse of the subprime mortgage market prompted $2.1 trillion in writedowns and losses at banks, brokerages and other financial firms worldwide. Chief Executive Officer Jamie Dimon bought Bear Stearns Cos. and the banking unit of Washington Mutual Inc. amid the turmoil three years ago.
JPMorgan has retreated 13 percent since Dec. 31, while the S&P 500 posted a gain of 2.1 percent, turning positive for the year yesterday for the first time since Aug. 3. The stock, which had 34 “buy” ratings and four “holds” as of Oct. 24, is beating its peers. The diversified financials group in the S&P 500 has slumped 20 percent in 2011.
“JPMorgan tends to be run more conservatively, which is probably why it’s liked by its analysts,” Craig Hodges, president of Dallas-based Hodges Capital Management Inc., who oversees about $700 million, said in an Oct. 26 phone interview.
Besides JPMorgan and Apple, the 15 companies include Google Inc. (GOOG) and Halliburton Co. (HAL), according to Bloomberg data. The most- favored stocks in the S&P 500 beat the entire index since the last bear market ended 2 1/2 years ago, the data show. They returned 144 percent on average since March 9, 2009, versus 90 percent for the S&P 500. Since the index peaked this year in April, the 15 stocks have lagged behind, falling 3 percentage points more than the measure.
Apple, the world’s most valuable technology company, rallied the most out of the group since the bull market began in March 2009, rising almost fivefold. The Cupertino, California- based company missed the average analyst profit estimate for the first time since at least 2004 last week. It had 49 “buy” ratings and seven “holds” as of Oct. 24.
While third-quarter revenue and earnings missed projections because of fewer-than-forecast iPhone shipments, Apple’s forecast for the first quarter was “strong” and should benefit from the new iPhone 4S, said William Power, an analyst at Robert W. Baird & Co. who has an “outperform” on the company and sees the stock climbing 33 percent to $540 a share in a year.
“We continue to view Apple’s growth prospects positively, driven by strong iPad and iPhone momentum,” Houston-based Power wrote in a note dated Oct. 24. “With several upcoming potential catalysts, and an attractive valuation level, Apple remains our top overall pick.”
To contact the editor responsible for this story: Nick Baker at firstname.lastname@example.org