Wells Fargo Shares Rise Ahead of Q4 Earnings; Target Price $81 in Best Case
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 favourable 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.
Technical analysis also suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity.
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