December 1, 2023

Investment Banking

Let Your Investment Banking Do The Walking

JPMorgan’s (NYSE:JPM) Investment Bankers Hit By Dealmaking Slump

JPMorgan Chase (NYSE:JPM), the largest U.S. bank by assets, is laying off 40 investment bankers in North America due to a continued slowdown in dealmaking. As per Bloomberg, the latest round of job cuts is being executed at all levels of seniority.

Layoffs Amid Dismal Deal Activity

Last week, JPM reportedly eliminated 20 additional investment banking roles in Asia, with junior staff at associate and analyst levels affected the most. According to Dealogic, merger and acquisition volumes fell 48% to $575 billion in the first quarter (as of March 30, 2023), marking the lowest level in over a decade. Rival banks are also reducing their headcount in their investment banking divisions, as high interest rates and persistent macro pressures have brought dealmaking activity to a standstill.

For instance, Goldman Sachs (NYSE:GS) is planning to further reduce its workforce following two previous rounds of layoffs. Earlier this month, there were reports about Citigroup’s (NYSE:C) plan to remove 30 investment bankers in London, along with 20 job cuts in the corporate banking division.  

In the first quarter, JPM’s investment banking fee fell 18% year-over-year to $1.65 billion. Last month, JPMorgan President Daniel Pinto cautioned that the bank expects its revenue from trading as well as investment banking to fall 15% year-over-year in the second quarter. It’s worth noting that in Q2 2022, the company’s investment banking fees fell 54% to $1.59 billion after experiencing a pandemic-induced spike in deal activity in the comparable quarter of 2021.

Overall, banks are cutting down their costs, given a lower appetite for deals due to elevated interest rates and continued macro uncertainty.

Is JPM a Good Stock to Buy?

Of the 13 Top Wall Street Analysts covering JPMorgan Chase stock, 10 have a Buy rating, while three rate it a Hold. The average price target of top analysts stands at $160.38, implying 15.5% upside. TipRanks identifies the Top Wall Street analysts per sector, per timeframe, and against different benchmarks. The ranking indicates an analyst’s ability to deliver superior returns through recommendations, which can provide useful insights to investors.

So far in June, six top analysts have reiterated a Buy rating on JPM, while one has reaffirmed a Hold recommendation. Shares have advanced 4.3% year-to-date.