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Investors who had expected JPMorgan Chase (JPM Free JPMorgan Stock Report) to turn in strong earnings for the opening quarter of 2018 weren't disappointed. The company, one of the largest banks in the United States and a Dow-30 component, reported a 44% increase in March-quarter share net. But the stock, which has been touching multiyear highs recently, is down about 3% in Friday mid-morning trading.

JPMorgan recorded earnings of $2.37 a share for the March period compared to $1.65 in the comparable period of 2017 and our estimate of $2.00. Profits advanced in all four of the company's core business segments. Revenues, up 10%, outpaced expense growth, up 5%, and results were helped by a lower loan loss provision and tax rate, reflecting the tax reform law passed last year.

JPMorgan's Consumer & Community Banking segment posted a 67% profit advance. Revenues, up 15%, were driven by higher net interest income, reflecting an 8% increase in loans, as well as wider deposit and credit card margins, and lower card acquisition costs. Expense growth, up 8%, included technology and marketing investments, growth-related costs, and higher auto lease depreciation. Credit card loan losses rose, but overall net charge-offs declined.

Meanwhile, Corporate & Investment Bank profits rose 23% on a 9% increase in revenues. Although investment banking revenues declined 7%, reflecting lower equity and debt underwriting fees, Markets revenues rose 7%, driven by strength on the equities side of the business. Treasury Services and Securities Services revenues also increased. Expenses were boosted by higher compensation and transaction costs, but credit costs moderated.

The Commercial Banking and Asset & Wealth Management segments also reported healthy profit advances. Commercial Banking revenues were mixed, but a positive swing in credit costs helped support a 28% profit advance for this segment, Asset & Wealth Management profits doubled, reflecting the absence of legal costs that depressed the segment's earnings in the year-earlier period.

Looking ahead, management expects net interest income in the $54 billion-$55 billion range in 2018, an 8%-10% year-to-year increase, supported by loan growth of 6%-7% and higher interest rates. It expects noninterest income to increase about 7%, depending on trading market conditions. It estimates operating expenses will total about $63 billion, including the impact of a new accounting standard. Credit costs appear likely to remain well controlled. Finally, results will benefit from a lower tax rate, which management estimates at about 20% in 2018.

In all, given the company's strong start to the year, we are raising our share-net estimate for 2018, from $8.25 a share to $8.90, and are introducing a 2019 estimate of $9.40. We have also increased our long-term projections for earnings per share and the stock's 3- to 5-year Target Price Range.

In sum, we like JPMorgan's near- and long-term prospects. But the issue's continued strength already reflects a good portion of its total return potential to 2021-2023. At this point, most investors may want to wait for a pullback in the share price before making commitments.

About The Company:JPMorgan Chase & Co. is a global financial services company offering a variety of services with operations in over 60 nations. Operational divisions include investment banking, treasury & securities services, asset management, commercial banking, retail financial services, card services, and private equity investment. The company had previously merged with Washington Mutual in September, 2008, Bank One in July, 2004, and Chase Manhattan in the final month of 2000.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.