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On Wednesday, BofA Securities analysts increased the price target for Wells Fargo stock (NYSE: NYSE:WFC) to $90 from $83, maintaining a Buy rating. The analysts highlighted the removal of the asset cap as a positive catalyst for the stock’s valuation and fundamental prospects. Currently trading at $75.65 with a market capitalization of $246 billion, InvestingPro analysis suggests the stock is undervalued, aligning with BofA’s bullish outlook. The bank has demonstrated strong performance with a 32% return over the past year.
The analysts believe that investor focus should now shift to the management’s ability to deliver high teens return on tangible common equity (ROTCE) by the years 2026 and 2027, with projected figures of 14.5% and 15.8%, respectively. They suggest that applying a 2x price-to-tangible book value (P/TBV) to their mid-2026 tangible book value implies a valuation per share of approximately $90, or around 11.5 times the estimated 2027 earnings per share (EPS). The stock currently trades at an attractive P/E ratio of 13.4x and offers a 2.12% dividend yield, having maintained dividend payments for an impressive 55 consecutive years.
BofA Securities sees potential for a new pool of investors, who had previously been deterred by regulatory challenges, to become interested in Wells Fargo’s unique growth story. The analysts also note room for efficiency gains in the consumer banking sector and the potential for capital relief. For deeper insights into Wells Fargo’s growth potential and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
The price target increase is based on higher assigned multiples, with the price-to-earnings (P/E) ratios adjusted to 13.5x and 12.5x from the previous 12.5x and 11.5x, and the P/TBV ratios adjusted to 2.2x and 2x from the prior 2x and 1.9x. The removal of the asset cap adds clarity to Wells Fargo’s future growth profile, according to the analysts. This valuation adjustment aligns with InvestingPro’s Fair Value assessment, which indicates significant upside potential for the stock.
In other recent news, Wells Fargo has experienced several significant developments following the Federal Reserve’s decision to lift its asset cap. Analysts from Morgan Stanley (NYSE:MS) have raised their price target for Wells Fargo stock to $87, reflecting expectations of accelerated loan and deposit growth, along with reduced expenses in the coming years. They project an increase in earnings per share (EPS), estimating $5.61 for 2025, $6.67 for 2026, and $8.13 for 2027. Barclays (LON:BARC) analysts also maintain an Overweight rating on the stock, noting that the removal of the asset cap is expected to positively impact earnings through increased commercial deposits and trade financing.
Meanwhile, Keefe, Bruyette & Woods raised their price target to $80, acknowledging Wells Fargo’s efforts to improve controls and risk management practices. They noted the company’s plan to issue restricted stock grants to employees as a sign of progress. Citi analysts, on the other hand, maintained a Neutral rating with a price target of $78, citing the removal of the asset cap as a positive development, though they do not foresee immediate impacts on loan growth or expense efficiencies.
JPMorgan analysts also reiterated a Neutral rating, maintaining a price target of $73.50, and highlighted the potential growth in trading and investment banking as a result of the asset cap lift. Wells Fargo’s expansion in trading assets and repo financing, along with a significant increase in corporate and investment banking trading revenues, were noted as key areas of growth. Overall, these developments underscore a period of strategic change and optimism among analysts for Wells Fargo’s future financial performance.
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