Compass Point downgrades Wells Fargo with catalysts priced in

Compass Point analyst David Rochester downgraded Wells Fargo to Neutral from Buy with an unchanged price target of $64. The analyst continues to see a number of “key potential positives to the story” over the next year, including the possible removal of additional regulatory consent orders and the asset cap, stronger buyback activity and potential near-term continued relative strength in the shares on delayed Federal Reserve rate cuts under a higher-for-longer interest rate scenario. However, Wells Fargo’s valuation as reflects these catalysts “much more appropriately” currently following the material relative strength in the shares year-to-date, the analyst tells investors in a research note. The firm finds the stock’s risk/reward as more balanced over the next year moving into a period of declining interest rates in the second half of 2024 and 2025.