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Citi downgraded Wells Fargo (NYSE:WFC) to Neutral from Buy as analyst Keith Horowitz believes that the potential for positive EPS revisions is largely priced into the stock's valuation.
"We continue to see tailwinds from fixed asset repricing, growth across fee categories, and improved efficiency, but our estimates are not too far above the Street," the analyst wrote in a note to clients.
Citi's price target for WFC rose to $63 from $57, on a higher normalized return on tangible common equity reflecting a higher likelihood of revised Basel III endgame rules.
Horowitz increased his 2024 EPS estimate by $0.05 to $5.10 (compared with FactSet consensus of $4.79), 2025 EPS estimate by $0.15 to $5.70 (vs. FactSet consensus $5.36), and 2026 EPS estimate by $0.25 to $6.30.
"With WFC trading at a premium on our implied cost of equity metric (10.4% vs. 11.3% for peers), we see more attractive risk/reward opportunities among the regionals," he said.
Wells Fargo (WFC) stock fell 1.1% in Wednesday premarket trading.
The Neutral rating contrasts with the SA Quant rating of Strong Buy, the average SA Analyst rating and the average Wall Street rating, both at Buy.
Check the SA stock screener the regional banks that rank highest by the SA Quant system.