J.P. Morgan Chase (JPM.US) stock price soared to a record this week, but Baird analysts sounded the alarm: expectations have been overdrawn!

The Zhitong Finance App learned that, driven by multiple favorable factors, the rise of JPMorgan Chase (JPM.US), the leading US stock bank, attracted market attention. The stock price soared more than 40% from the April low, and hit a record high this week. However, analysts at Baird believe that this wave of gains has overshadowed expectations. The bank downgraded the rating of America's largest bank from “neutral” to “underperforming.”

Analysts Baird acknowledged that the current major US banks do have reasons to be bullish, and J.P. Morgan Chase is the “industry gold standard,” but they emphasized that market expectations have been overinflated, and the stock's valuation has been seriously overdrawn.

Analyst David George (David George) wrote in the research report, “We know that it is out of place at this moment, and we also understand that J.P. Morgan is an industry benchmark — leading business share and a rock-solid balance sheet, but market expectations have been pushed too high.”

The quarterly earnings report exceeded expectations and the stress test was about to pass. Coupled with the loosening of regulatory policies (including the relaxation of bank capital rules), multiple benefits made the market optimistic about the prospects of large banks. This optimism drove J.P. Morgan's stock price up for six consecutive days, closing at $288.75 on Thursday, more than 20% higher than Baird's 12-month target price of $235.

“Instead of chasing recent gains, it is better to take the opportunity when regional banks pull back,” they pointed out in Friday's report that there is a significant price difference between large banks and “moderately undervalued” regional peers.

According to the data, the KBW Bank Index has rebounded by more than 30% since Trump's tariff policy triggered a market sell-off in early April, while regional banks only rose 18% during the same period, which is still far below the high during the year.

Analysts also downgraded the Bank of America (BAC.US) rating from “outperforming the market” to “neutral,” saying that its stock price had hit fair value. Affected by this, shares of J.P. Morgan Chase and Bank of America weakened slightly as of press release, while US stock futures indices and other bank stocks bucked the trend.

The Federal Reserve is scheduled to announce the results of the annual bank stress test at 4:30 p.m. EST on Friday. J.P. Morgan is expected to release quarterly earnings on July 15, while Bank of America will disclose its results the next day.