Wells Fargo gains a bull after dividend cut, reserve build
Evercore ISI analyst John Pancari upgrades Wells Fargo (NYSE:WFC) to Outperform from In Line as the bank’s slashed dividend and bolstered reserves “help clear the decks on capital & credit uncertainty.”
WFC gains 2.4% in premarket trading.
Pending cost-cutting also “bodes well for earnings power,” he writes. CEO Charlie Scharf suggests on WFC’s call that expense savings will start in H2 2020.
“The battle is likely to be a long one and revenue headwinds remain a lingering factor, but we believe the tide is turning on Wells fundamentals — and at just 0.76x TBV and 9.4x 2021 EPS, the valuation offers a compelling entry point,” Pancari writes.
WFC’s stock performance lags S&P 500 and the SPDR S&P Bank ETF (NYSEARCA:KBE) during the past five years:
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