WFC: Future Returns Will Reflect Fee Strength Amid Ongoing Execution Risks

We raise our Wells Fargo price target modestly to $94.50 from $93.71, reflecting analysts' increased confidence in fee driven earnings strength, improving profitability metrics, and higher medium term return targets following a series of post Q3 estimate and target upgrades.

Analyst Commentary

Recent Street research indicates a generally constructive stance on Wells Fargo, with a series of price target increases following the Q3 print. Analysts are sharpening their focus on the bank's ability to translate fee driven strength and capital return into sustainably higher returns on tangible common equity and, ultimately, valuation re rating.

Bullish Takeaways

• Bullish analysts highlight the Q3 core EPS beat, driven by stronger than expected fee revenue and reserve releases, as evidence that earnings power is tracking ahead of prior expectations.
• The introduction of a new medium term ROTCE target in the high teens is viewed as a key catalyst. This reinforces confidence that improving efficiency and capital deployment can support a higher valuation multiple.
• Upward revisions to outer year EPS estimates, including assumptions for stronger second half fee revenues and a faster pace of share buybacks, underpin higher price targets and a more constructive total return outlook.
• Stronger fee performance relative to expectations in Q3 is seen as an important sign of revenue diversification, reducing reliance on net interest income and improving the durability of the growth narrative.

Bearish Takeaways

• Bearish analysts remain cautious on the sustainability of fee strength and reserve driven beats, emphasizing that future quarters will need to demonstrate cleaner, recurring earnings to justify further upside.
• There is ongoing concern that net interest income estimates may still be conservative, but with limited perceived upside. This constrains how much earnings revisions can drive additional multiple expansion.
• Some see the new, higher return targets as ambitious, arguing that execution risk around cost control, regulatory progress, and balance sheet optimization could cap valuation at only a modest premium to peers.
• A subset of more cautious voices continues to favor other large banks, viewing Wells Fargo as a relative rather than absolute outperformer until it proves more consistent progress against its medium term objectives.

What's in the News

• Wells Fargo CEO Charlie Scharf said the bank is not under pressure to pursue acquisitions now that a key regulatory penalty has been lifted, and he emphasized organic growth opportunities across existing businesses (Reuters).
• The company announced a new $570 million, energy net positive campus in Las Colinas, Irving, Texas, bringing together 4,500 employees and underscoring its long term commitment to the Dallas Fort Worth region and sustainable operations.
• Wells Fargo reached a proposed $33 million global settlement, subject to court approval, in consolidated lawsuits alleging it assisted subscription related entities that misled consumers by facilitating bank accounts and fund transfers.
• From July 1 to September 30, 2025, Wells Fargo repurchased over 74 million shares across two buyback authorizations, deploying roughly $6 billion and bringing total buybacks since July 2023 to more than $30 billion.
• The company reaffirmed 2025 guidance that net interest income should be roughly in line with 2024, and it reported Q3 2025 net loan charge offs of $942 million, down from $1.11 billion a year earlier.

Valuation Changes

• Fair Value: risen slightly to $94.50 from $93.71, reflecting modestly higher projected intrinsic value.
• Discount Rate: edged down marginally to 8.19 percent from 8.21 percent, implying a slightly lower required return on equity risk.
• Revenue Growth: trimmed slightly to 6.94 percent from 7.01 percent, indicating a modestly more conservative top line outlook.
• Net Profit Margin: increased fractionally to 25.26 percent from 25.24 percent, signaling a small improvement in expected profitability.
• Future P/E: moved up modestly to 13.38x from 13.26x, suggesting a slightly higher valuation multiple applied to forward earnings.