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Analyst Ratings Suggest Weaker Performance for Wells Fargo

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Ratings lean towards “hold” and “underperform”

Commercial bankers (XLF) have seen their stock prices rise at a faster pace on trading, core banking, rates, offtake, and wealth divisions. However, as rates near their expected highs and banks’ offtake slows amid high cash flow generation and stable growth in the economy, banks are inviting lower targets from analysts over the next one year.

So far in September 2017, 12 of the 30 analysts covering Wells Fargo (WFC) have given the stock “buy” or “strong buy” ratings compared with 13 of 31 analysts in June 2017. 13 analysts awarded the stock “hold” ratings and five analysts have given it “underperform” ratings.

Wells Fargo’s one-year mean price target is $57.62 per share, implying a 13% rise from its current level compared with a 31% rise in 2016.

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Comparative ratings

Among the bank’s major peers, 23 of 31 Wall Street analysts have awarded Bank of America (BAC) a “buy” or “strong buy” rating in September 2017 on higher credit offtake, rising NIMs, and stable investment banking revenues. Seven analysts have rated it as a “hold,” while one analyst has rated it a “sell.”

A total of 17 of 29 analysts covering Citigroup (C) have given the bank a “buy” or “strong buy” rating in September 2017 on expected growth in earnings, credit offtake, and decent margins. Ten analysts have given it a “hold,” and two analysts have given it an “underperform” or “sell” rating.

For JPMorgan Chase (JPM), 15 of 29 analysts have given the stock a “buy” or “strong buy” rating in September 2017 on a growing core banking business, while 12 analysts have given it “hold” ratings. Two analysts have given JPM stock an “underperform” or “sell” rating.

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