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Wells Fargo Mulls Sale Of Asset Management Arm – Report

support@smarteranalyst.com (Ben Mahaney)
·1 min read

Wells Fargo is looking for buyers for its asset management business, Reuters reported on Friday citing two people familiar with the matter. According to the report, the US banking giant is in talks with asset management and private equity firms for a potential deal.

Wells Fargo’s (WFC) asset management arm is part of its Wealth and Investment Management division which offers mutual funds and retirement products. Citing two of the sources, Reuters reported that the sale of the business unit, which managed assets worth $578 billion as of June 30, could fetch Wells Fargo $3 billion.

According to the report, the divestment of the asset management business is a part of newly appointed CEO Charles Scharf’s strategy of exiting from non-core businesses and saving costs. Scharf has targeted to save $10 billion annually in the long-run. (See WFC stock analysis on TipRanks).

In a note to investors on Oct. 23, KBW analyst Brian Kleinhanzi said that the financial impact of the planned asset divestment “could be muted and potential buyers could be few.” Kleinhanzi reiterated a Hold rating on the stock with a price target of $25 (7.4% upside potential).

Currently, the rest of the Street is sidelined on the stock. The Hold analyst consensus is based on 6 Holds, 2 Sells and 4 Buys. With shares down nearly 57% year-to-date, the average price target of $28.78 implies upside potential of about 23.6% to current levels.

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