Raymond James on Wells Fargo (WFC): 'We view the quarter positively'

Raymond James analyst Michael Rose reiterated a Market Perform rating and {REMOVEPT} price target on Wells Fargo (NYSE: WFC).

The analyst comments "We view the quarter positively as results largely reinforce the investment framework outlined in our recently published resumption of coverage (link) and the company moves further from regulatory remediation to execution of its growth strategy. To this end, 2Q26 results provide further evidence that management is making progress on that front, highlighted by broadbased revenue growth across both Consumer and Commercial Banking, WIM, and CIB, continued balance sheet deployment, improving fee income, positive operating leverage, and still-benign credit trends. While guidance was unchanged (see below), we believe second-quarter results suggest execution continues to track ahead of prior expectations. Broad-based balance sheet growth, stronger fee income, positive operating leverage, and continued capital generation all support management's post-remediation growth strategy and, in our view, reinforce the long-term earnings opportunity. That said, as of 8:07 a.m. ET, WFC shares are down ~2.0% in pre-market trading (link), suggesting investors may have been looking for an increase in full-year guidance following the stronger-thanexpected quarter. Notable highlights in the quarter reflected: 1) stronger-than-forecast/consensus revenue growth driven by broad-based fee income strength (+i-banking, +trading, +deposit-related fees); 2) loan growth was robust at ~6% ann. but below our forecast/consensus where average loan yields fell 2 bp to 5.60%; 3) deposit growth exceeded our forecast/consensus at ~13% ann. although the cost of IB deposits rose 9 bp to 1.99% and its NIB mix fell from 25.1% to 24.7%; 4) the NIM fell 4 bp to 2.43% vs. RJ/consensus both at 2.44%; 5) credit metrics improved fueling a lower than forecast loan loss provision (LLR ratio down 1 bp to 1.35%); 6) noninterest expenses were lower than projected/consensus (+personnel); 7) share repurchases of $3 billion fell short of our forecast/ consensus of $4.0 billion/$3.7 billion; and 8) capital ratios remained strong (CET1 ratio of 10.3%) while TBV rose 2.6% to $46.13."

For an analyst ratings summary and ratings history on Wells Fargo click here. For more ratings news on Wells Fargo click here.

Shares of Wells Fargo closed at $87.67 yesterday.

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