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Wells Fargo: Can it continue to Outperform Expectations in Q4?
Stock Analysis & Ideas

Wells Fargo: Can it continue to Outperform Expectations in Q4?

Wells Fargo (NYSE:WFC), a financial services company, is set to report its fourth-quarter 2021 upcoming earnings on January 14.

Wells Fargo reported strong Q3 results, driven by an improving economic environment. Yet, reduced net interest income owing to low yields on earning assets and fewer loans impacted the results to some extent.

The firm earned $1.17 per share in the third quarter, much above analyst expectations of $0.99 per share. In addition, revenues of $18.83 billion came in above the Street’s forecast of $18.35 billion.

Coming to the price performance, Wells Fargo’s stock gained around 67% in the past year and 25% in the last six months. Solid Q4 results might propel the stock price upward, so let’s take a closer look at what analysts on the Street are expecting.

Q4 Results May Come in above Expectations

According to analysts, Wells Fargo is expected to report adjusted earnings of $1.1 per share and revenues of $18.4 billion in Q4.

Wells Fargo has continued to outperform profits projections in the preceding four quarters, and it’s likely that the business might be able to do so again in Q4.

Factors to Note about Wells Fargo

Wells Fargo had a strong first nine months of 2021 and is projected to keep it up in the December quarter. In the fourth quarter, equity markets are anticipated to have strengthened, bolstering market-driven revenues. This is projected to have bolstered income in wealth, trust, trading, and asset management.

On a less positive side, Wells Fargo’s expenses are expected to have continued to climb in the quarter under review, owing to its franchise spending in technology and digitization projects. In addition, greater legal expenditures are projected in the quarter to be reported, due to customer remediation charges and ongoing litigation difficulties.

Nevertheless, the corporation is striving to decrease expenses by streamlining its organizational structure, closing branches, and optimizing operations and other back-office staff.

Wall Street’s Take

Wall Street is cautiously optimistic about Wells Fargo, as seen by the Moderate Buy consensus rating, which is based on 11 Buys and 4 Holds. Wells Fargo’s stock projections show an average price target of $56.23. This implies almost 2.7% upside potential from the current levels.

Smart Score Metric

Wells Fargo scores a “Perfect 10” from TipRanks’ Smart Score rating system. This makes it one of TipRanks’ Top Stocks and implies that the stock has strong potential to outperform market expectations.

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Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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