Wells Fargo (WFC) is set to release its third quarter 2024 financials on October 11. Wall Street analysts expect a drop in both revenue and earnings for Q3, citing ongoing economic challenges and declining interest rates. They expect WFC to report earnings of $1.28 per share, representing a 13.5% decrease year-over-year. Additionally, revenues are expected to fall by 21% from the year-ago quarter to $20.36 billion, according to data from TipRanks.
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Though analysts forecast both revenues and earnings to decrease in Q3, it’s important to highlight that WFC has a strong quarterly performance history. It has beaten earnings estimates for six consecutive quarters (as pictured below).
Factors to Consider Ahead of Q3
According to TipRanks’ Bulls Say, Bears Say tool shown below, bullish analysts highlight several key factors for WFC ahead of Q3. They point to strong earnings growth potential, largely driven by non-interest rate factors. Additionally, ongoing share buybacks are expected to boost EPS, creating additional value for shareholders. They also believe that the stock is attractively valued at the current levels.
Nevertheless, challenges persist. Bears note that Wells Fargo’s expenses have risen 5% year-over-year due to higher operating losses, personnel costs, and a $284 million Federal Deposit Insurance Corporation (FDIC) special assessment, which is an additional fee to bolster the FDIC’s insurance fund. In addition, bears also noted that WFC stock has dropped 6%, underperforming the flat bank index after missing 2Q24 net interest income expectations.
Analysts’ Take on WFC Ahead of Q3
As Wells Fargo approaches Q3, analysts have weighed in with their perspectives. In the past week, five analysts provided their ratings on Wells Fargo. Three maintained their Buy ratings, while five-star analyst Steven Chubak of Wolfe Research upgraded his rating from Neutral to Buy.
Chubak highlighted that, despite the downside risk present across rate-sensitive banks, this risk is already reflected in WFC’s stock, which is trading at a significant discount to its target price-to-earnings ratio—the largest among its peers in the banking and brokerage sector.
In contrast, J.P. Morgan analyst Vivek Juneja reiterated his Hold rating on WFC on Monday, reflecting a more cautious stance.
Options Traders Anticipate a Minor Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 4.94% move in either direction.
What Is the Price Target for WFC?
Turning to Wall Street, Wells Fargo stock has a Moderate Buy consensus rating based on six Buys and seven Holds assigned in the last three months. At $63.28, the average WFC price target implies a 10.44% upside potential. Shares of the company have gained 17.9% year-to-date.
