Compass Point Reiterates WFC Target, Lowers EPS Estimates

Compass Point is reiterating its $33 price target and its Neutral rating on shares of Wells Fargo & Company WFC. “We are reducing our 2011E EPS from $2.71 to $2.67 and our 2012E EPS from $3.24 to $3.20,” Compass Point writes. “Our adjustment is reflective of higher deposit insurance costs after the implementation of a new deposit assessment base in 2010Q2. We anticipate concerns of mortgage servicing settlements and consensus estimate reductions due to lower mortgage banking estimates will limit upside for WFC.” “WFC currently trades at 9.8x our ‘normalized earnings' estimate,” Compass Point continues. “Assuming a 13x P/E multiple on our “normalized earnings” estimate discounted by 15% for 2 years, our price would indicate $32 per share. Our price target gives additional credit for share repurchases, but notes additional near‐term headline risk related to mortgage servicing concerns and an increasingly likely ‘double-dip' in home prices.” Wells Fargo & Company currently trades at $32.47.