Wells Fargo price target raised to $84 from $78 at Raymond James

Raymond James raised its price target on Wells Fargo (NYSE:WFC) stock to $84 from $78 on Wednesday, while maintaining its Strong Buy rating on the financial institution. With a current market capitalization of $235.93 billion and trading at a P/E ratio of 12.88, InvestingPro analysis suggests the stock is currently undervalued.

The price target increase follows the removal of the asset cap that had been imposed on Wells Fargo, according to Raymond James. The firm believes the medium-to-long term impacts from lifting this restriction will be "material" to the bank’s performance. The bank has demonstrated strong financial discipline, maintaining dividend payments for 55 consecutive years and achieving a 25.73% return over the past year.

Raymond James anticipates positive earnings per share revisions over the next month, driven by expectations for a larger balance sheet and higher trading and investment banking revenue. The firm increased its 2026 EPS estimate for Wells Fargo by 4%.

The research firm cited several positive catalysts on the horizon for Wells Fargo, specifically highlighting expectations for "superior EPS growth and improved profitability."

Wells Fargo has been operating under an asset cap imposed by regulators, which limited the bank’s ability to grow its balance sheet beyond a certain threshold.

In other recent news, Wells Fargo has seen several significant developments. The Federal Reserve recently lifted a $1.95 trillion asset cap, which had been in place since 2018 following a fake accounts scandal. This regulatory change has enabled Wells Fargo to enhance its governance and risk management, leading to an upgraded outlook from S&P Global Ratings, which shifted from stable to positive. The removal of the asset cap is expected to boost Wells Fargo’s commercial and investment banking sectors, which were previously constrained.

Analyst firms have responded to these changes with adjustments to their ratings and price targets. Piper Sandler increased Wells Fargo’s stock price target to $85, maintaining a Neutral rating, while BofA Securities raised its target to $90 with a Buy rating, citing the asset cap removal as a positive catalyst. JPMorgan, however, maintained its Neutral rating with a price target of $73.50, noting the potential for growth in trading and investment banking.

Wells Fargo’s profitability has been on the rise, with adjusted preprovision net revenue reaching nearly $30 billion in 2024, up from $23.5 billion in 2022. The company’s return on tangible common equity also increased to 13.4% in 2024. Despite challenges in consumer loan growth, Wells Fargo is expanding in areas like credit cards, investment banking, and commercial banking. As the company navigates the post-cap environment, analysts and investors will be closely watching its strategic initiatives and risk management efforts.

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