Wells Fargo’s Growth Prospects Brighten with Asset-Cap Removal: Buy Rating Reaffirmed

Wells Fargo (WFC – Research Report), the Financial sector company, was revisited by a Wall Street analyst yesterday. Analyst Ebrahim Poonawala from Bank of America Securities reiterated a Buy rating on the stock and has a $90.00 price target.

Ebrahim Poonawala has given his Buy rating due to a combination of factors including the recent removal of the asset-cap by the Federal Reserve, which is seen as a positive catalyst for Wells Fargo’s stock valuation and fundamental growth. The lifting of this restriction allows the bank to focus on achieving high returns on tangible common equity (ROTCE), with management aiming for high teens ROTCE by 2026/2027, which is above the consensus estimates.
Poonawala believes that the removal of the asset-cap opens up opportunities for new investors who were previously deterred by regulatory constraints, and sees potential for efficiency gains and capital relief. The price objective has been raised to $90, reflecting higher assigned multiples, as the asset-cap removal provides clarity on the bank’s future growth prospects. This, combined with management’s refocused efforts on franchise efficiency, supports the reiteration of the Buy rating.

In another report released today, Barclays also maintained a Buy rating on the stock with a $87.00 price target.