Wells Fargo shares gained nearly 15% so far this year ahead of its fourth-quarter earnings, which is expected to enjoy better loan activity and a higher net interest income than that seen in early last year due to favorable industry trends.
The fourth-largest U.S. lender is expected to report its fourth-quarter earnings of $1.11 per share, which represents a year-on-year growth of over 70% from $0.64 per share seen in the same period a year ago.
The San Francisco, California-based multinational financial services company would post revenue growth of more than 4% to $18.8 billion.
Wells Fargo shares rose over 1% to $55.35 on Monday. The stock jumped nearly 15% so far this year after surging nearly 60% in 2021.
“Wells Fargo (WFC) benefit to EPS from rising rates is the highest in the group, with each 50bps increase in FF driving 15% increase in EPS; 50bps in long-end rates drives 7% to EPS. WFC is in a strong position to monetize higher rates, as cash stands at 15% of earning assets, 7% points above pre-pandemic levels,” noted Betsy Graseck, equity analyst at Morgan Stanley.
“WFC is taking action to restructure its business mix as it works to exit the Fed consent order/asset cap and reduce its expense base. Excess capital at Wells stands at 10% of market cap vs. 5% for median Large Cap Bank, enabling a net buyback yield of 10% in 2022 and a total cash return of 12%. Risks around the timing of asset cap removal and further regulatory action remain.”
Wells Fargo Stock Price Forecast:
Fifteen analysts who offered stock ratings for Wells Fargo in the last three months forecast the average price in 12 months of $56.62 with a high forecast of $65.00 and a low forecast of $45.00.
The average price target represents a 2.29% change from the last price of $55.35. From those 15 analysts, 11 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $61 with a high of $81 under a bull scenario and $27 under the worst-case scenario. The firm gave an “Overweight” rating on the multinational financial services company’s stock.
Several other analysts have also updated their stock outlook. Jefferies raised the target price to $64 from $59. BofA Global Research lifted the price objective to $70 from $60. JPMorgan upped the target price to $57 from $53.5. Evercore ISI raised the target price to $60 from $54.
Wells Fargo Long (Buy)
Enter at: 57.05