Posted on August - 24 - 2009

JP Morgan’s Q3 Sentiment Remains Strong

We are currently at the midpoint of JP Morgan’s (JPM) third quarter.

Average third quarter analyst estimates for the TARP winner are $.45/share in EPS and $24.70 Billion in Revenue. Eighteen analysts track the stock with one upward EPS revision in the last 30 days and no downward EPS revisions in the last 30 days.

Quarter to date, JP Morgan’s stock price has risen from $34.11 to Monday’s close of $43.01. This represents an $8.90 or 26% increase in price.

I always find this an anxious period waiting to see how a company’s quarter is going to unfold. One thing I have discovered of value is to analyze a stock’s sentiment relative to other similar companies. In this case, I will use the Piqqem sentiment index to see how JP Morgan’s sentiment compares to Goldman Sachs (GS), Citi (C), and Bank of America (BAC).

I’m looking for relative moves or changes that may foreshadow an early change in the quarter. (Piqqem leverages the ‘wisdom of crowds’ by allowing its users to vote on the price direction of a stock and then applies its own propriety factors to calculate sentiment for a security. In their model, 0 is the lowest and 4 is the highest sentiment.)

Sentiment for JP Morgan Compared to Goldman, Citi, and Bank of America

Source: Piqqem

The above chart shows JP Morgan’s current sentiment as of 8/24/09 at 2.86 as compared to Goldman at 2.78, Citi at 2.38, and Bank of America at 2.35. This equates to JP Morgan’s sentiment being 2.9% stronger than Goldman, 20.0% stronger than Citi, and 21.7% stronger than Bank of America. Based on absolute sentiment, both JP Morgan and Goldman fall into the Buy category, while Citi and Bank of America come in as a Hold.

Change in Quarter to Date Sentiment Tells a Different Story

The change in sentiment for these four securities during the current quarter tells a slightly different story. Both JP Morgan and Goldman have shown increases in sentiment for the quarter with JP Morgan showing the largest increase in the group. On the other hand, Citi is down almost 7% and Bank of America, who is the lowest rated in absolute sentiment in the group, is showing a 6.5% increase in sentiment. Changes in sentiment can be an early warning system for the underlying security. Even though Bank of America’s absolute sentiment indicates a hold, the change in sentiment points to an emerging buy signal. For Citi, the absolute sentiment indicates a hold, but the change in sentiment indicates that this security should be viewed with caution.

For JP Morgan, both absolute sentiment and the change in quarterly sentiment are very positive. Only JP Morgan knows their progress quarter to date, but based on sentiment analysis, the quarter appears to be on track.Disclosure: No Positions

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