- With more than 30% upside potential, WFC is a buy at prices around $45.
- The ongoing war in Ukraine, the pandemic, and most importantly, the uncertain monetary policies of the US Federal Reserve may keep WFC undervalued for now.
- Wells Fargo is likely to see an increase in credit losses from historical lows. Also, the Federal Reserve’s plans to reduce inflation certainly reduce economic growth.
- Thus, I don’t see the company increasing its Tier 1 ratio to its pre-pandemic levels of 14% to 15%.
- According to my base case scenario (Tier 1 ratio of 12.5%, total assets CAGR of 3.2%, and COE of 8.5%), I calculate a fair value of $58 for WFC.
For further details see:
Despite All The Uncertainties, Wells Fargo Is A Buy