Digital Banking And Wealth Management Will Expand Future Reach

Wells Fargo's analyst price target has been raised from $89.13 to $91.44. This change reflects stronger-than-expected Q3 earnings, improved fee revenue, and updated guidance. These developments have led analysts to become incrementally more optimistic on the company's growth trajectory.

Analyst Commentary

Recent research updates reveal a broadly positive outlook among analysts, highlighted by upward revisions to price targets and earnings estimates following Wells Fargo's Q3 performance. However, while the consensus reflects optimism regarding management's initiatives and improved fee revenue, some analysts remain cautious about the challenges that lie ahead for sustained growth and profitability.

• Bullish analysts highlight Wells Fargo's stronger than expected Q3 earnings, largely driven by a core EPS beat and realized reserve release.
• The introduction of a new medium-term ROTCE target in the 17 to 18 percent range signals management's ambition and commitment to improving return metrics.
• Improved fee revenue and anticipated share buybacks are boosting FY25 earnings estimates, contributing to higher price targets.
• Favorable results this quarter have prompted several analysts to express increased confidence in the company's growth trajectory and execution capabilities.

• Bearish analysts maintain that further, consistent execution will be required to demonstrate sustained progress toward management's targets and to justify recent valuation increases.
• Some view the bank's net interest income estimates as low, limiting the potential for significant upside even with recent positive developments.
• Cautious sentiment persists for those who see stronger opportunities in peers, highlighting continued competitive pressures within the banking sector.
• Although Q3 results improved, questions remain around the durability of fee revenue and the impact of lower net interest income on future growth.

What's in the News

• Major banks, including Wells Fargo, are competing for lead roles in the anticipated IPOs of Fannie Mae and Freddie Mac. These offerings could be among the largest in history (Wall Street Journal).
• Wells Fargo's push into credit cards is creating tailwinds for Cardlytics. Analysts note that Wells Fargo runs its offers through Cardlytics, and both companies stand to benefit from further growth (Citron Research via X and CNBC).
• US banking lobbies, including representatives for Wells Fargo, have warned lawmakers about a regulatory “loophole” that allows crypto exchanges to pay indirect interest on stablecoins while banks cannot. They have raised concerns about fair competition (Financial Times).
• The White House is preparing an executive order to fine banks such as Wells Fargo for dropping customers for political reasons. The order would direct regulators to investigate violations of credit and consumer protection laws (Wall Street Journal).
• As US tariffs increase, European companies are diversifying away from major Wall Street banks. Companies like Wells Fargo are affected by this shift, with nearly half of euro bond deals bypassing the largest US banks (Bloomberg).

Valuation Changes

• Fair Value has risen slightly from $89.13 to $91.44, indicating a modest increase in assessed intrinsic value.
• Discount Rate has edged up marginally from 8.21% to 8.22%, reflecting a minimal change in the assumed cost of capital.
• Revenue Growth expectations have increased from 5.44% to 6.51%, suggesting improved confidence in Wells Fargo's future top-line expansion.
• Net Profit Margin has decreased from 24.18% to 22.78%, indicating a slightly lower anticipated profitability rate.
• Future P/E has declined from 14.64x to 14.18x, which implies a modestly more attractive valuation relative to forward earnings.