Wells Fargo’s recent dip in share price is catching the attention of investors, and RBC Capital Markets sees this as a golden opportunity. Analyst Gerard Cassidy took action by upgrading the stock from “sector perform” to “outperform,” keeping his confident price target of $80 per share. This suggests there’s an 18% potential increase from where it closed on Wednesday. Recently, Wells Fargo’s shares have been on a bit of a roller coaster, dropping 3% this week and 12% just in March. This kind of movement is part of a larger trend of market sell-offs and increased volatility affecting many.
In a note released on Thursday, Cassidy pointed out that the decline in stock price could be a strategic entry point for investors. Under CEO Charlie Scharf’s leadership, Wells Fargo is working hard to navigate through its regulatory hurdles while simultaneously boosting profitability. Cassidy believes that once Wells Fargo lifts its asset cap and hits a 15% return on average common equity, a higher valuation is on the horizon. There’s even more good news if the regulatory environment becomes less stringent, which could further benefit the company.
Cassidy further emphasized that Wells Fargo is financially robust, suggesting that the bank is poised for some regulatory relief. He also noted the company’s dedication to enhancing shareholder value through dividend payments and buybacks when the opportunity presents itself. Cassidy expects that after the Basel III “Endgame” proposal wraps up, Wells Fargo will likely lower its common equity tier 1 ratio by channeling excess capital back to shareholders.
This optimistic view aligns with the sentiment of most analysts covering Wells Fargo. According to data from LSEG, out of 23 analysts, 15 have rated the stock as a buy. On average, these analysts are predicting a promising 20.5% upside for the stock, indicating a potentially rewarding future for investors willing to ride out the current fluctuations.
