JPM - Wells Fargo: Decent Prospects But Don't Get Carried Away At These Levels

2024-05-22 09:01:38 ET

Summary

• Wells Fargo stock has outperformed its peers and a diversified portfolio of banking stocks, generating returns of over 56% in the past year.
• Non-interest income growth is expected to be resilient (currently growing at a run rate of 17%) while headcount and branch adjustments could reflect well on the cost base.
• WFC may get an opportunity to expand its asset base from FY25, and going by sell-side estimates, the expectation is for higher earnings growth over each of the next 3 years.
• WFC's valuations look pricey, its yield looks unappealing, and the risk-reward on the charts does not look too favorable.

Solid Alpha, Despite NII Weakness

Over the past year, the stock of Wells Fargo ( WFC ), the third-largest bank in the US by market cap, has done exceedingly well for its stakeholders by generating returns of over 56%, and outperforming not just its largest peers but also a diversified portfolio of 25 other banking stocks....

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