Deutsche Bank Upgrades Wells Fargo (WFC) to Buy; Risks Priced In

(Updated - June 4, 2020 6:04 AM EDT)

(updating comment, updating rating)

Deutsche Bank analyst Matt O'Connor raised the price target on Wells Fargo (NYSE: WFC) to $34.00 while upgrading to a Buy rating (form Hold)

The anlayst comments "WFC shares have been the worst performing bank stock under our coverage YTD, declining 46% vs. the BKX down 29% and the S&P 500 down 3%. The lag is even more meaningful since bank stocks bottomed March 23, with WFC shares lagging the BKX by 2900bps over this period. Some of the lag in shares is justified in our view as we had been cautious on the long term EPS power of WFC and we thought the current crisis would delay the turnaround story. There's also increasing market concerns that WFC may cut its dividend (currently yielding over 7%). However, most of all these risks seem priced into shares in our view. Furthermore, we expect the new CEO (Charlie Scharf) to lay out a medium/long term turnaround story later this year/early 2021. Given all of this, the risk/reward seems to have improved--so we are upgrading WFC from HOLD to BUY with a $34 target price."

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