As hard as last spring’s crash was, many bank stocks rebounded just as quickly. Due to the better economic outlook, the rally in the industry was stronger in the USA than in Europe. Wells Fargo shares stand out in particular. The former flagship bank and one of Warren Buffett’s favorite stocks got into difficult waters as early as 2016 due to a scandal, then came the pandemic. In the meantime, however, things are running smoothly again and shareholders are getting their money’s worth. Now things could really get going.
Wells Fargo recently sold its wealth management business and is now focusing more and more on its core business of lending. What often seems boring to many investors is now lucrative in the upswing after the pandemic. Numerous stimulus programs of the Biden government and the return of consumers’ appetite for spending should drive GDP growth this year, according to estimates, to 6.5 percent. Financial institutions that provide loans also benefit from this. As it has not been for years, the focus is on the development of interest rates.
Still not caught up
Inflation in the US has risen for several months in a row, most recently in May to 5.0 percent and thus slightly higher than the market expected. This leads more and more Fed and government officials to plead for higher key interest rates. Bond yields have already anticipated this development and have risen sharply since the beginning of the year. Wells Fargo would be one of the biggest beneficiaries if interest rates moved back above zero. The market is already playing the scenario. However, the share is still trading below the pre-Corona level.
No recommendation to sell
The analysts are also positive for the share. On average, the price target of the experts listed by Bloomberg is 45.00 dollars, which leaves some room for improvement from the current level. Of 26 analysts, 14 would still access the stock immediately, 12 recommend sticking with it. No expert would sell. Wells Fargo’s competitor Bank of America, of all things, is impressed.
Bank of America still sees 29 percent price potential
Wells Fargo stock still has significant upside as the bank’s new leadership team tries to find new sources of income and appease regulators, according to analysts at Bank of America. Erika Najarian upgraded the paper from “neutral” to “buy” and wrote in a message to customers on Friday that the bank was at the beginning of a “multi-year transformation”. The company raised its target price for the stock from $ 47.00 to $ 60.00. This corresponds to an upside potential of 29 percent compared to the closing price on Thursday.
Wells Fargo
(WKN: 857949)
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THE SHAREHOLDER recommended Wells Fargo at the beginning of the year and continues to adhere to its positive assessment. The stock is currently consolidating, but investors can get in as long as the GD50 holds at $ 44.55. It is only a matter of time before the 2018 downtrend is exited on the upside at $ 47.08, which would trigger a strong chart signal. Investors stick with it and note the stop at EUR 26.00. The stock is still a buy.
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