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Wells Fargo Q2 Earnings to Rise Over 245%; Target Price $44

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The fourth-largest U.S. lender, Wells Fargo, is expected to report a profit in the second quarter after posting its first loss last year since the global financial crisis of 2008.

The San Francisco, California-based multinational financial services company is expected to report earnings per share of $0.97 per share, which represents year-over-year growth of over 245% from a loss of -$0.66 per share seen in the same quarter a year ago.

But Wells Fargo’s revenue would decline 0.3% to $17.777 billion from $17.84 seen a year earlier. In the last four consecutive quarters, the company has delivered earnings surprise only twice.

Wells Fargo Stock Price Forecast

Eighteen analysts who offered stock ratings for Wells Fargo in the last three months forecast the average price in 12 months of $49.29 with a high forecast of $60.00 and a low forecast of $43.00.

The average price target represents an 11.79% change from the last price of $44.09. From those 18 analysts, 11 rated “Buy”, seven rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $49 with a high of $68 under a bull scenario and $21 under the worst-case scenario. The firm gave an “Overweight” rating on the fourth-largest U.S. lender’s stock.

Several other analysts have also updated their stock outlook. Jefferies raised the target price to $51 from $50. RBC upped the target price to $45 from $40. Credit Suisse lifted the target price to $54 from $50. Raymond James raised the price target to $52 from $50.

Analyst Comments

Wells Fargo (WFC) appears to be beginning to take action to restructure its business mix as it works to exit the Fed consent order/asset cap and reduce its expense base. While uncertainty remains around impact of business exits and timing of consent order/asset cap exit, we believe risk more than accounted for in the stock at 9x our 2022e EPS,” noted Betsy Graseck, equity analyst at Morgan Stanley.

WFC benefit to EPS from rising long end rates is the highest in the group, with each ~50bps increase in the 10yr driving ~4% to NII and as much as ~8% to EPS. We model WFC driving their expense ratio down to 64% by 2023 on reduced risk and compliance spend, operational efficiencies, and branch optimization. Lower expense ratio possible.”

Check out FX Empire’s earnings calendar

This article was originally posted on FX Empire