Wells Fargo gains for 7th consecutive session as fee income boosts earnings

Wells Fargo & Company (NYSE:WFC) extended gains for the seventh straight trading session as fee income helped the diversified bank beat Q3 earnings estimates.

The stock closed the day 1.92% higher at $62.16.

The San Francisco-based banking giant’s Q3 earnings topped the Wall Street consensus. Strength in its fee-based revenue over the first nine months of 2024 helped to offset net interest income headwinds, CEO Charlie Scharf said.

“Wells Fargo reported upbeat results for this quarter, driven by strong activity in its investment banking division and favorable credit performance in its loan book,” said Ian Bezek, Investing Group Leader of Ian’s Inside Corner.

The stock has been gaining in the run-up to its quarterly earnings announcement, and has extended the gains after the results were out. WFC added 10.58% over the course of the last six trading days.

A notable rise was logged on Friday, October 11, after the bank’s Q3 earnings results, finishing the day 5.61% higher at $60.99.

The S&P 500 Index Banks Industry Group also closed the day in green, 4.21% higher, after large banks kicked off the earnings season with better-than-expected bottom lines.

Another notable increase was seen a week before on Friday, October 4. WFC ended the day 3.60% higher at $56.96, while the S&P banking index was up 2.65% amid a blowout jobs report.

The Wells Fargo stock price has increased by 26.29% year-to-date, and is currently trading close to its 52-week high of $63.35.

Short interest stood at 0.91% of the total float as of September 30, representing 31.01M shares sold short.

The company was upgraded to Outperform from Peer Perform at Wolfe Research, citing the market doesn’t appear to be pricing in the potential for its asset cap to be lifted.

WFC was also included in the Morgan Stanley screen of quality cyclicals, which included companies in the top 1,000 stocks by market cap and have Overweight ratings.

The average sell-side analyst rating on the stock is Buy.

Seeking Alpha’s Quant Rating system sees WFC as a Strong Buy. Quant, which assigns the stock a score of 4.75 on a scale of 5, ranked WFC among the top 10 financial sector stocks with a market cap of $10B or greater.

Meanwhile, SA authors grade WFC as Hold.

“These are long-term positives, but not necessarily anything that can drive more positive stock price performance over the next 6-12 months,” noted SA contributor Ian Bezek.

“Given the bank’s falling net interest income and the likelihood of more challenging macroeconomic conditions going forward, I do not see WFC stock as an attractive place to deploy new capital with a price above $60 per share,” said Bezek.

“There are risks on multiple fronts, and the valuation now has more optimistic expectations baked into it. As such, I’m moving to a hold on WFC stock for the time being,” said Bezek.