Analysts at Keefe, Bruyette & Woods (KBW) downgraded Wells Fargo (NYSE:WFC) to Market Perform from Outperform and lowered the target price to $56 from $62.
The downward adjustment comes after a robust rally in WFC shares, which outperformed the broader KBW Nasdaq Bank Index by 48% since summer 2021 “due to expense control, buybacks, and an asset-sensitive balance sheet,” analysts said.
The stock has also outperformed the index by 10% on a year-to-date basis amid renewed investor excitement over the potential lifting of the asset cap.
“Although we share this enthusiasm, we believe the stock is set for a consolidation phase given expectations for NII to underperform peers and trough in 1H25,” analysts wrote.
“That said, the stock is positioned well for a strong second half as NII troughs and the asset cap is potentially lifted in late 2025,” they added.
Furthermore, the value of the bank’s 2027 earnings potential is expected to be higher by the end of 2025.