The recent rally in shares of JPMorgan and Bank of America may soon reverse, according to Baird. Analyst David George downgraded JPMorgan to underperform and Bank of America to neutral, citing a less attractive risk-reward outlook. His $235 12-month price target for JPMorgan implies more than 18% downside from Thursday’s close, while the $52 target on Bank of America results in more than 9% potential upside. “We understand the optimism around mega cap banks here — benefits from deregulation, solid capital positions, capital markets are opening up and JPM is the gold standard in the group,” he wrote in a nine-page report published Friday. “However, [we] are of the view that BAC is at [fair value] and JPM has modest downside from current levels, with JPM trading at record valuations. We understand that few care about valuation currently, but we still believe they are one of the primary drivers of forward returns.” Both U.S. banks have outperformed the S & P 500 in 2025. JPMorgan has soared more than 20% so far this year and Bank of America has advanced about 8%, while the broad market index has risen 4%. As a result, the JPMorgan forward price-to-earnings ratio had widened to 15.5 and Bank of America’s to 13.1, according to FactSet. JPM BAC,.SPX YTD mountain JPM vs. BAC and S & P 500, year-to-date With JPMorgan selling for a record 2.9 times tangible book value, George said its future returns will “likely not be what they’ve been the last several years at these valuation levels,” leaving its risk-reward profile “unattractive.” “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,” he said. “We simply think that expectations are super high here.” Bank of America’s risk-reward profile is more “balanced,” still leading George to the sidelines. “We upgraded BAC in April, being of the view that the market was under-appreciating its earnings power and overly focused on [Berkshire Hathaway’s] selling of the stock during the tariff panic,” he wrote. Bank of America is up almost 12% over the past three months alone. “We remain huge fans of the BAC franchise and the bank should continue to experience the tailwind of an improving [net interest margin] along with a more favorable capital markets backdrop, but feel like the stock is largely reflecting it here.” The majority of Wall Street analysts remain bullish on both. Some 14 of 26 have a strong buy or buy rating on JPMorgan, and 21 of 25 analysts rate Bank of America the same, according to LSEG data. Both banks are falling less than 1% premarket Friday.
