Baird says it’s time to take profits on JPMorgan Chase in downgrade to underperform

Baird downgraded JPMorgan Chase (NYSE:JPM) to Underperform as analyst David A. George sees limited upside potential at the stock’s current valuation, even though he agrees that the bank is “best-in-class.”

“It has scale, skill, and dominant market share across its various businesses, alongside a great management team,” George wrote in a note to clients. But with JPMorgan (NYSE:JPM) shares trading at ~2.6x tangible book value, ~17% market cap/assets, and ~14x 2026 EPS, “We find the risk/reward unattractive here and urge investors to take profits.”

Note that in the past month, JPMorgan (JPM) stock has risen 17%, outpacing the S&P 500’s (SPX) 3.09%. For the year, it has climbed 71% vs. 36% for the S&P. Meanwhile, its gains are generally in line with the KBW Nasdaq Bank Index (BKX)

In addition, the bank is over-earnings on provision and net interest margin, George added.

Even though Tuesday’s election of Donald Trump is expected to bring a more benign regulatory environment and a more pro-growth macro agenda, the expectations “are quite high,” the analyst wrote. In addition, “management’s appetite for buybacks may not align with lofty market expectations.”

Baird’s Underperform rating on JPM contrasts with the SA Quant rating of Hold and the average SA Analyst rating and the average Wall Street rating, both at Buy.