Are More Downgrades in Store for Wells Fargo?



Analysts’ ratings

Wall Street analysts have been critical of Wells Fargo (WFC) after news of the fraudulent accounts scam broke out. Most analysts (XLF) believe that a scandal like this could lead to a fall in the bank’s valuations (BAC) (JPM) and tarnish its image.

Wells Fargo’s cross-selling ability has driven its premium valuations in the past. But after this scam, it might have to make changes to its business model. Overall, 51% of analysts have rated Wells Fargo a “buy,” while 32% have rated it a “hold.” About 16% of analysts have assigned a “sell” rating to the bank. Wells Fargo has a 12-month price target of $50.70, indicating a 14.5% upside potential.

Recently, analyst David Long at Raymond James cut the stock’s rating to “underperform” and reduced his earnings estimates. He also cut EPS (earnings per share) estimates to $4 per share this year from $4.12 last year and to $3.94 for 2017.

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Rafferty Capital analyst Dick Bove said significant damage was done to Wells Fargo’s business model, warranting a downgrade. He downgraded the bank to a “sell” and assigned a price target of $44. Barclays (BCS) cut Wells Fargo’s price target from $61 to $58. It currently rates Wells Fargo “overweight.”


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