Shares of Wells Fargo (WFC) fell over 3% in pre-market trading hours after the company’s net interest income came in below estimates, weighed down by lower rates on floating-rate assets. The company reported $11.7 billion in net interest income (NII) for the second quarter, slightly below analysts’ expectations of $11.8 billion. Wells Fargo also lowered its full-year NII growth outlook to be roughly flat compared to last year, down from its earlier guidance of 1% to 3% growth, citing weaker performance in its markets division.
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Analysts had already questioned the bank’s ability to meet its NII targets due to a slow start to 2025 and high interest rates impacting loan demand. The bank had originally expected NII to stay steady in the first half of the year and pick up in the second half.
Wells Fargo Tops Revenue Estimates
Wells Fargo’s Q2 revenue rose 0.6% to $20.82 billion, slightly ahead of the $20.75 billion consensus, breaking a three-quarter streak of revenue misses. Meanwhile, it reported earnings per share of $1.60 for the quarter ending June 30, up from $1.33 a year ago and beating the FactSet estimate of $1.41. The company’s provision for credit losses dropped to $1.01 billion, down from $1.24 billion a year earlier, which supported the bank’s profit growth in the second quarter.
The results follow a key milestone last month when the Federal Reserve lifted its asset cap, removing a major constraint on the bank’s growth. Wells Fargo CEO Charlie Scharf said lifting the asset cap gives the bank new opportunities to grow. He added that the bank can now better support customers, businesses, and communities while helping boost the U.S. economy.
With the asset cap now lifted and most regulatory hurdles behind it, analysts expect Wells Fargo to draw more investor attention, supported by its improving profit outlook.
Is Wells Fargo a Good Buy Right Now?
Overall, Wall Street has a Moderate Buy consensus rating on WFC stock, based on 11 Buys and seven Holds assigned in the last three months. The average Wells Fargo stock price target of $84.88 implies about 1.8% upside potential from current levels.
