JPMorgan Sells Notes – Analyst Blog

According to IFR, a Thomson Reuters service, JPMorgan Chase & Co. (JPM) sold $2.75 billion of notes on Thursday.

 

JPMorgan executed the sale of notes in two tranches of $1.25 billion of five-year notes to yield 110 basis points and $1.5 billion of new 10-year notes priced to yield 127.5 basis points over comparable U.S. treasuries.

 

JPMorgan has not disclosed anything about the use of the proceeds from the sale of these notes.

 

 

Over the last 30 days, 3 of the 20 analysts covering JPMorgan have lowered estimates for the first quarter of 2010, while only 1 upward revision was witnessed. For 2010, similar estimate revisions were observed.

 

Currently, the Zacks Consensus Estimate for the first quarter is earnings of 64 cents per share, which would be up 60.6% from the year-ago quarter. Also, the full year estimate of $3.04 would be up about 35.7% from 2009.

 

The higher number of downward estimate revisions for the first quarter and full year 2010 indicates a likelihood of downward pressure on the performance of the stock in the near term.

 

With respect to earnings surprises, the stock has been steady over the last four quarters, with all positive surprises. The average remained positive at 120.6%. This implies that JPMorgan has surpassed the Zacks Consensus Estimate by 120.6% over that period.

 

 

JPMorgan’s fourth quarter earnings came in at 74 cents per share, substantially ahead of the Zacks Consensus Estimate of 61 cents. This also compares favorably with earnings of 6 cents in the prior-year quarter.

 

Better-than-expected results of JPMorgan were primarily aided by continued strong performance of the Investment Bank. All the other segments except Consumer Lending and Card Services also delivered solid results during the quarter. However, high levels of consumer credit costs and increased provision for credit losses were the primary factors, which negatively impacted the results.

 

We anticipate continued synergies from JPMorgan’s diversification and strong capital position, but increasing provisions and rising consumer credit costs will drag upcoming results. However, we are impressed to see some improvement in credit quality during the reported quarter.