Citi maintains neutral rating on Wells Fargo stock after Fed decision

Published 04/06/2025, 11:48
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On Wednesday, Citi analysts maintained their Neutral rating on Wells Fargo (NYSE:WFC) stock, with a price target of $78.00. The $246 billion banking giant, which has delivered a robust 32% return over the past year, continues to trade at an attractive P/E ratio of ~13x. The announcement followed the Federal Reserve’s decision to lift the asset cap linked to Wells Fargo’s 2018 consent order, citing improvements in the bank’s governance and risk management. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value estimate.

The Fed’s decision is seen as a positive development for Wells Fargo, though the 2018 consent order remains in effect until other conditions are met. This latest move reflects the progress made since Charlie Scharf took over as CEO. The bank has maintained dividend payments for 55 consecutive years, with analyst targets ranging from $65 to $90 per share.

Citi analysts noted that the removal of the asset cap was largely anticipated by the market. This was due to the termination of seven consent orders this year and positive remarks from management at a recent industry conference.

The analysts highlighted that the removal of the asset cap allows Wells Fargo to increase commercial deposits and utilize more of its balance sheet for trading growth. However, they do not foresee immediate impacts on loan growth or expense efficiencies.

The stock’s current rating and price target reflect these expectations, as the bank continues to address the remaining provisions of the 2018 consent order.

In other recent news, Wells Fargo has seen significant developments following the Federal Reserve’s decision to lift the asset cap imposed on the bank since 2018. This cap removal is expected to enhance Wells Fargo’s growth potential and improve its financial performance. Goldman Sachs has maintained a Buy rating for Wells Fargo, with analysts forecasting a potential 14-19% increase in earnings per share. Evercore ISI also raised its price target to $88, citing the asset cap lift as a crucial step for the bank’s bottom-line growth.

Additionally, Wells Fargo announced the divestiture of its rail leasing unit to a joint venture between GATX (NYSE:GATX) Corporation and Brookfield Infrastructure (NYSE:BIPC). This move aligns with the bank’s strategy to streamline operations and focus on core services. In another regulatory development, the Office of the Comptroller of the Currency terminated agreements from 2015, marking progress in resolving past regulatory issues. Wells Fargo has also rewarded its employees with a special one-time award of $2,000, recognizing their contributions during challenging times.

These developments highlight Wells Fargo’s ongoing efforts to strengthen its operations and governance. The financial community remains attentive to how these changes will impact the bank’s performance and regulatory compliance in the future.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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