Susquehanna Financial cut its profit estimates of JPMorgan Chase & Co. (NYSE:JPM) after the company guided weak results for its investment bank unit.
The brokerage lowered its fourth quarter earnings outlook to $1.10 a share from $1.15 a share and full-year 2011 earnings estimate to $4.65 a share from $4.70 a share.
Analysts, polled by Thomson Reuters, expect the company to earn, on average, 97 cents a share and $4.57 a share for the fourth quarter and full year, respectively.
"Overall, the company's outlook for 4Q provided at a conference on Dec. 7 has not changed much since the 3Q earnings conference call, but it is slightly more negative," analyst David Hilder wrote in a note to clients.
JPMorgan now expects total revenue in the investment bank to be sequentially flat in the fourth quarter. Within mortgage banking, production revenue is also expected to be sequentially down in the fourth quarter due to lower spreads and volume and higher repurchase costs.
Credit card charge-offs, which were 4.34 percent in the third quarter, could improve modestly in the fourth quarter.
In addition, the company said it could repurchase up to $950 million of equity, either common stock or warrants, as it did not pay all the dividends authorized for the year by the Fed.
Though the company did not provide specific guidance on loan loss reserves or litigation reserves for the quarter, CEO Jamie Dimon said it would be very hard for the company not to release credit-loss reserves. He personally believes the reduction in credit loss reserves will be more than the increase in litigation reserves.
Hilder has a "positive" rating and $26 price target on the JPMorgan stock, which closed Wednesday's regular trading session at $34 on the New York Stock Exchange.