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Wells Fargo Delivers Stellar Q4 Earnings; Shares Up 3.7%

Shares of Well Fargo & Co. (WFC) reached a new all-time high of $58.87, after the bank delivered stellar fourth quarter and full-year 2021 results.

The company’s better-than-expected results were driven by economic recovery, which led to a rise in consumer spending and investment banking fees, increased asset-backed fees in the Wealth and Investment Management business, and solid equity returns generated in the Venture Capital and Private Equity businesses.

Shares of the diversified financial services provider closed up 3.7% at $58.06 on January 14.

Stellar Q4 Results

The company’s Q4 earnings more than doubled to $1.38 per share, significantly exceeding analysts’ estimates of $1.12 per share.

Similarly, Q4 revenue came in at $20.86 billion, a 13% growth compared to the prior-year quarter, further outpacing analysts’ estimates of $18.78 billion. The bank’s net interest income fell 1% year-over-year to $9.26 billion due to the lower yield environment. Meanwhile, non-interest income jumped 27% year-over-year to $11.59 billion due to higher equity income, and net gains from the sales of divested businesses.

For the full year fiscal 2021, WFC reported earnings of $4.95 per share, significantly higher than the prior-year earnings of $0.43 per share. Additionally, FY21 revenue of $78.49 billion saw a 5.7% gain compared to FY20. Year-end loans fell 3% to $875 million, while deposits grew 7% to $1.47 billion.

CEO Comments

CEO of Wells Fargo, Charlie Scharf, said, “The changes we’ve made to the company and continued strong economic growth prospects make us feel good about how we are positioned entering 2022. But we also remain cognizant that we still have a multiyear effort to satisfy our regulatory requirements – with setbacks likely to continue along the way – and we continue our work to put exposures related to our historical practices behind us.”

Analysts’ Take

Responding to the results, Goldman Sachs analyst Richard Ramsden reiterated a Hold rating on the stock with a price target of $56, which implies 3.5% downside potential to current levels.

Ramsden found the results a bit weak but believes investors are more likely to focus on the favorable net interest income guidance and expense outlook in the rising interest rate environment.

Overall, the stock has a Moderate Buy consensus rating based on 11 Buys and 4 Holds. The average Wells Fargo price target of $58.31 implies that shares are almost fully valued at current levels.

Stock Investors

TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on Wells Fargo, with 3.2% of portfolios tracked by TipRanks increasing their exposure to WFC stock in the past 7 days.

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