The stock of U.S. bank Wells Fargo (WFC) has been downgraded less than a week after it hit an all-time high.
Don’t Miss TipRanks’ Half-Year Sale
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
David Long, a four-star rated analyst at Raymond James Financial (RJF), lowered his rating on WFC stock to a Hold-equivalent market perform from Strong Buy previously. The downgrade comes days after Wells Fargo stock hit a record high of $83.94 after the commercial bank had a longstanding cap on its size removed by U.S. regulators.
The downgrade from Raymond James stands out because most of Wall Street remains optimistic about Wells Fargo’s growth prospects after the seven-year-old cap on the size of its asset base was removed. Regulators had imposed the cap, the first of its kind when it took effect in 2018, as punishment for the bank’s widespread fake-accounts scandal that was revealed in 2016.
Upside Is Priced In
In a note to clients, Long said that the bank’s size leaves little room for its shares to rise further in the short-term. “While we remain bullish on Wells Fargo’s growth prospects and continued profitability improvement, we believe upside to its (earnings per share) estimates is now appropriately reflected in its premium valuation,” wrote the analyst.
WFC stock is currently trading at 12.4 times the per-share earnings Raymond James expects the bank to generate in 2026, compared with the average of about 11 times among its financial peers and competitors. More broadly, Long expects investors to favor smaller bank stocks going forward with large-caps such as JPMorgan Chase (JPM) and Bank of America (BAC) also trading near 52-week highs.
Is WFC Stock a Buy?
Wells Fargo stock has a consensus Moderate Buy rating among 17 Wall Street analysts. That rating is based on 11 Buy and six Hold recommendations issued in the last three months. The average WFC price target of $83.23 implies 0.44% downside from current levels.
