Wells Fargo Stock Could Be A Multi-Year Transformation Story, BofA Says

Shares of Wells Fargo & Co WFC have lost more than 50% year to date and the company is the only bank in its peer group to be still trading below the pre-pandemic levels, according to BofA Securities.

The Wells Fargo Analyst: Erika Najarian upgraded the rating for Wells Fargo from Neutral to Buy, while raising its price target from $47 to $60.

The Wells Fargo Thesis: Although the partial resolution of regulatory issues and recent cost reductions seem to be priced in, the company’s stock does not reflect the cyclical and self-help catalysts ahead, Najarian said in the upgrade note.

“On cyclicality, WFC still has the 3rd-largest deposit base in the US, and at 11% market share, has nearly 2x the #4 bank — which should aid meaningful margin (NIM) expansion and spread revenue growth when growth and rates normalize (and asset cap lifts),” the analyst wrote.

“On self-help, potential regulatory remediation and the expense opportunity are well understood by the Street. The more interesting part of the WFC transformation, in our view, is its potential to fill out profitability (ex-regulatory related costs) or product gaps to move closer to mid-teens ROTCE even without much assist from rates,” she added.

WFC Price Action: Shares of Wells Fargo had risen by 0.34% to $46.62 at the time of publication Friday.

(Photo: Wells Fargo)