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San Francisco-based Wells Fargo & Company (WFC) is one of the largest and most recognized banks in the U.S. It offers banking, insurance, investments, mortgage, and consumer/commercial finance through over 4,700 branches and various other channels. With an impressive market cap of $203.5 billion, it operates in four segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and Wells Fargo fits right into that category. Its market cap exceeds this threshold, reflecting its substantial size, stability, and influence in the financial sector. The bank is a well-established and trusted brand boasting a comprehensive suite of financial products and services, with a vast customer base and a strong financial position.
However, there are challenges amid the positives. Wells Fargo’s shares are trading 7.4% below its 52-week high of $62.55, which it touched on May 15. Moreover, shares of WFC are up 1.5% over the past three months, lagging behind the Vanguard Mega Cap ETF’s (MGC) 5.6% returns over the same time frame.
Over the longer term, WFC stock is up 17.7% on a YTD basis, and 37.5% over the past 52 weeks. By contrast, the MGC is up 14.2% in 2024 and 27.3% over the past year, falling short of WFC's performance.
To confirm the bullish price trend, the stock has been on an uptrend, trading above its 100-day and 200-day moving averages since mid-November.
Over the past year, Wells Fargo has navigated through economic turbulence, with higher interest rates impacting its net interest income, a key metric for measuring bank earnings from loans. Another key challenge Wells Fargo faces is the growth restriction imposed by the Federal Reserve in response to its past scandals. However, with the Biden administration easing restrictions, there is a strong chance the asset cap on Wells Fargo will be lifted within the next year or two.
On the bright side, Wells Fargo has maintained a stable deposit base despite the growing competition from online banks with higher yields. Additionally, the company has successfully expanded its sources of noninterest income, further diversifying its revenue streams.
It is worth noting that over the past 52 weeks, Wells Fargo trails behind its top rival, JPMorgan Chase & Co. (JPM), with JPM stock surging 41.6%. However, Wells Fargo has outpaced JPM stock’s 17.4% returns on a YTD basis.
Despite Wells Fargo’s underperformance, analysts are cautiously optimistic about the stock’s future. The stock has a consensus rating of “Moderate Buy” from the 26 analysts covering it, and the mean price target of $60.60 reflects a premium of 4.6% to current levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
