JPMorgan Chase & Co. (JPM) stock has surged nearly 40% since its April lows, reaching record highs this week thanks to a mix of positive catalysts. But according to analysts at Baird, the rally may have gone too far, too fast.
“We realize we are fighting the tape here, and understand that JPM is a best-in-class franchise, with dominant share in all of their businesses and truly a fortress balance sheet,” analysts led by David George wrote in a note downgrading the bank to underperform from neutral, issuing their second sell rating on the stock. “We simply think that expectations are super high here.”
A combination of upbeat quarterly earnings, favorable stress test expectations, and signals of regulatory relief—such as the potential easing of capital requirements—has buoyed bank stocks. JPMorgan has benefited from this sentiment, with shares rising for six straight sessions and closing Thursday at $288.75, more than 20% above Baird’s 12-month price target of $235. On Friday, the stock slipped as much as 1.3%, lagging behind bank peers, while the S&P 500 posted a modest gain.
While Baird analysts acknowledge the positive momentum in the sector and continue to view JPMorgan as “the gold standard” among major U.S. banks, they caution that investor expectations have become overly optimistic and the stock now looks richly valued.
“Rather than chase recent strength, we would be more opportunistic on the regionals we like on weakness,” they wrote Friday, highlighting the growing gap between large-cap banks and their “modestly underpriced” regional counterparts.
The KBW Bank Index has rebounded over 30% since its early April slump, when market jitters were triggered by President Donald Trump’s tariff agenda. By comparison, regional bank stocks have gained less than 20% and remain well below their year-to-date highs.
Baird also downgraded Bank of America Corp., cutting its rating from outperform to neutral, noting the stock has now reached fair value. Bank of America shares also ended Friday lower.
The Federal Reserve is scheduled to release results from its annual bank stress tests at 4:30 p.m. Friday. JPMorgan is set to report quarterly earnings on July 15, with Bank of America following on July 16.
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