Wells Fargo upgraded at Phillip Securities on potential for earnings growth

Diversified bank Wells Fargo & Company (NYSE:WFC) was upgraded at Phillip Securities on potential for earnings growth.

The San Francisco-based banking giant’s Q3’24 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.

“Despite an expected 8% decline in Q424 NII, Phillip expects Q424 EPS to improve by ~10% (excluding one-time expenses) from growth in non-interest income, particularly the continued recovery in investment banking fees and higher gains from trading activities, and lower expenses and provisions,” Phillip said in a research note.

The brokerage increased its 2024 earnings estimate for WFC by ~5% on the back of higher investment banking estimates and lower expense and provision estimates. The earnings estimate were offset slightly by lower NII estimates.

Phillip raised its recommendation on the stock to Accumulate from Neutral, and increased the price target to $65 from $61.

WFC shares were trading +0.95% Tuesday pre-market at $62.75.

The average Wall Street analyst rating on the stock is Buy. Seeking Alpha authors give WFC a Hold rating and the Quant Rating system assigns it a Strong Buy.