Wells Fargo (WFC) Tops Street Estimates, Profit Fueled by Loan Demand and Cost Cuts

January 14, 2022 9:19 AM EST
Get Alerts WFC Hot Sheet
Price: $53.89 +0.56%

Rating Summary:
    22 Buy, 18 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 17 | Down: 15 | New: 37
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Shares of Wells Fargo (NYSE: WFC) are flat in pre-market after the company reported its 4Q earnings.

Wells Fargo reported Q4 EPS of $1.38 to easily top the analyst estimate of $1.12. Revenue for the quarter came in at $20.86 billion versus the consensus estimate of $18.78 billion.

“The changes we’ve made to the company and continued strong economic growth prospects make us feel good about how we are positioned entering 2022. But we also remain cognizant that we still have a multiyear effort to satisfy our regulatory requirements – with setbacks likely to continue along the way – and we continue our work to put exposures related to our historical practices behind us,” Chief Executive Officer Charlie Scharf commented.

WFC saw its profit soar 86% to $5.8 billion, helped by gains from a unit sale. Investors are likely to focus on the expense guide after JPM (NYSE: JPM) shares fell on higher-than-expected expense guidance for 2022.

Wells Fargo saw its non-interest expenses fall 11% to $13.2 billion. The company said it is seeking to achieve a further $3.3 billion worth of cost cuts in 2022.

Goldman Sachs analyst Richard Ramsden reiterated a Neutral rating and his $56.00 per share price target. He saw some weakness in the earning report, although investors are likely to focus more on the NII and expense guidance.

“We peg 2021 core expenses at $53.1bn, and the company outlined a 2022 expense target of $51.5bn, which is in-line with the Street, and in the context of the much better NII guidance, is likely to be viewed favorably by investors, given that consent orders often result in limited ability to reduce expenses in the near term. Moreover, we look for further clarity on further business sales and the longer term expense trajectory in 2023, especially in a rising rate environment,” Ramsden wrote in his note.

By Senad Karaahmetovic | senad@streetinsider.com

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