Wells Fargo & Co. (NYSE: WFC) has been released from the U.S. Federal Reserve’s banking prison. If that sounds too harsh for what the bank did in its account opening scandals, then think of them just finally being freed off of house arrest or probation. The reality is that Wells Fargo has been in the strategic camp for much of the last few months in anticipation of being freed from the Fed’s constant oversight.
Now some key investment banking firms are suggesting that Wells Fargo could have a lot more room to run higher well beyond 2025.
Wall Street had already come around to having Buy and Outperform ratings in anticipation that Wells Fargo was going to finally be release from its $1.95 trillion asset cap. This was in place for 7 years. But now Wall Street is giving Wells Fargo the most implied upside of many of the largest banks in America.
Wells Fargo will be free to grow its assets again, looking to boost capital efficiency in its consumer business operations. This release should also allow Wells Fargo to be a stronger competitor against the largest banks and against some of the larger regional banks that had taken some Wells’ market share over the last 7 years.
PERFORMANCE & RELATIVE VALUE VS. PEERS
As for 2025 performance, Wells Fargo is up 6.4%year-to-date. Rivals like Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) are each up 2.5% and 14.3% year-to-date, respectively. Wells Fargo is valued at 1.5-times stated book value; and BofA and JPMorgan Chase are valued at 1.24-times and 2.3-times their stated book value (per share), respectively.
Wells Fargo’s $243 billion market cap relative to peers is about 72% of Bank of America Corp. (NYSE: BAC) and only about 32% of rival JPMorgan Chase & Co. (NYSE: JPM).
WALL STREET SUPPORTS WELLS FARGO
Many analyst reports were issued on or around June 4 as the U.S. Federal Reserve lifted the longstanding asset cap of $1.95 trillion in a unanimous 7-0 vote to release it from the dark clouds that had been hanging over the bank. That had been in place for over 7 years on the heels of the account opening scandal and other ongoing issues. Now the bank is being cleared to grow again.
On June 6, the independent research firm Argus reiterated its Buy rating and raised its price target to $86 from $75 as the removal of asset cap offers renewed growth opportunities. Argus sees the cap removal allowing it chase better growth in deposits, its credit card portfolio, its wealth management franchise, and even in the capital markets segment. The firm cited better capital efficiency metrics based on less burdensome regulatory and compliance costs ahead.
BofA issued the strongest price objective from the major brokerage firms. BofA reiterated its Buy rating and raised its price objective to $90 from an already strong $83 on June 4. And more recently, BofA also maintained Wells Fargo on its prized US 1 list of its best invest ideas from its research analysts. The firm believes that investors should not take a “sell the news approach” as there is no reason not to earn “best-in-class returns” against peers. BofA’s investment rationale should sum it up:
Wells Fargo is a multi-year transformational story with multiple catalysts. We think WFC still has multiple opportunities to improve productivity (outside of regulatory related costs) and build product scale. We see “normalized” ROTCE of high-teens as achievable, thus helping shares re-rate higher closer to 2-times tangible book value.
Wells Fargo was reiterated as Overweight and its price target was raised to $87 from $77 at Morgan Stanley on June 4. According to Morgan Stanley, it expects that the Fed’s release from the asset cap “will spur a multi-year period of growth at Wells, with slowing expense growth.” More growth on less spending! As for what it can recapture in lost market share since 2017, that translates to 2.2 percentage points of lost market share in US deposits and 3.3 percentage points of market share in loans.
Raymond James reiterated its Strong Buy rating on June 18, hiking its price target to $84 from $78 in the call. Details of this call were not yet available. Other fresh analyst calls:
- Wells Fargo was reiterated as Buy and its price target was raised to $86 from $76 at Goldman Sachs on June 6.
- Wells Fargo was reiterated as Overweight and its price target was raised to $85 from $77 at Piper Sandler on June 4, after having been upgraded from Neutral with a $77 price target on April 8.
- Wells Fargo was reiterated as Outperform and its price target was raised to $88 from $72 at Evercore ISI on June 5, and the firm has had a positive rating since 2024.
IN THE END…
Wells Fargo closed up 3% at $74.74 on Wednesday with a 52-week range of $50.15 to $81.50. Its consensus was listed as $81.33 at Finviz.
DISCLAIMERS
Please be informed that all analyst ratings and price targets mentioned above were issued by each firm named in this summary. Their ratings and targets may differ greatly from other firms on Wall Street. Oggonomics does not issue any formal ratings and does not maintain any price targets of its own on any of these stocks. Also please remember that no analyst ratings and price targets, even those with the strongest conviction, ever come with any guarantees of profits and they never contain money-back guarantees in case you lose money.
