Wells Fargo (NYSE:WFC) was downgraded to Hold from Buy at Odeon in a note on Thursday with a $48.80 price target.
Analysts at the firm noted the bank's recent Q4 report, which saw it post earnings of $0.86 per share. They said there appears to have been $0.43 in net one-time charges, suggesting operating earnings of $1.29 per share in the quarter.
"Wells may not be able to replicate this result until mid-2026," said Odeon. "Therefore, even though the bank's strategy makes sense, it may be tough going for the stock."
The firm also believes the banking industry is facing significant challenges at present. "It is a high-cost producer of many of its core products and, therefore, it is losing market share. Wells may be losing share within the industry," Odeon explained.
"The new Basel III endpoint rules, if accepted, will further weaken banking's ability to take share. Wells is shifting selected business lines to avoid harm here," they added.
Analysts at Odeon believe the industry's balance sheet is structured improperly due to the sharp rise in interest rates.
While they note that Wells Fargo appears to be restructuring its business to deal with these issues, Odeon added that the bank is facing a potentially weakening economy.