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On Wednesday, Keefe, Bruyette & Woods analysts raised the price target for Wells Fargo (NYSE:WFC) stock to $80 from $75 while maintaining a Market Perform rating. The decision follows the Federal Reserve’s determination that Wells Fargo has satisfied all conditions necessary to lift the asset cap imposed by the 2018 consent order.
The analysts noted that this development is significant for Wells Fargo, as it highlights the company’s efforts to improve its controls and risk management practices. The accomplishment reflects extensive work throughout the company, and as a result, Wells Fargo plans to issue $2,000 in restricted stock grants to each of its 215,000 employees. The company’s financial health shows promise, with InvestingPro data revealing a 55-year track record of consistent dividend payments and a recent 14% dividend growth.
The analysts expressed optimism about the stock’s near-term performance, anticipating a positive reaction. However, they also cautioned that potential gains might be limited due to the current low-growth environment and the stock’s existing trading metrics.
Wells Fargo’s stock currently trades at 1.78 times tangible book value and 11.6 times estimated 2026 earnings, compared to peers trading at 1.85 times and 11.7 times, respectively. This context suggests that while the stock may see some gains, the broader market conditions and valuation metrics could temper expectations.
The lifting of the asset cap marks a significant milestone for Wells Fargo, indicating progress in addressing past regulatory issues and enhancing its operational framework.
In other recent news, Wells Fargo has seen significant developments with the Federal Reserve lifting the asset cap imposed in 2018. This decision follows improvements in the bank’s governance and risk management, verified by an independent review and the Federal Reserve. The removal of the asset cap is considered a turning point for Wells Fargo, allowing the bank to enhance its commercial deposits and trading growth. In response, Wells Fargo announced a special $2,000 award for full-time employees as a token of appreciation for their contributions.
Analysts have reacted to these changes with varied perspectives. Evercore ISI raised its price target for Wells Fargo stock to $88, citing potential long-term earnings growth. Meanwhile, Goldman Sachs maintained its Buy rating, projecting a 14-19% increase in earnings per share and a return on tangible common equity uplift by 2026. Citi analysts, however, kept a Neutral rating, noting that the asset cap removal was anticipated and reflecting this in their price target of $78.
Additionally, Wells Fargo announced the divestment of its rail equipment leasing division to a joint venture between GATX (NYSE:GATX) Corporation and Brookfield Infrastructure (NYSE:BIPC). The transaction, expected to conclude by early 2026, aligns with Wells Fargo’s strategy to streamline operations and focus on core client services. This move is not expected to significantly impact the company’s financial standing or earnings.
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