The bearish case for Wells Fargo & Co (NYSE: WFC) can no longer be justified after CEO Tim Sloan announced his retirement,
according to Raymond James.
The Analyst
Raymond James' David Long upgraded Wells Fargo from Underperform to Market Perform with no price target.
The Thesis
Sloan's retirement "removes a headwind" and marks a "positive step" forward for investor sentiment, Long said in the note. His
retirement wasn't a major surprise after receiving criticism from the U.S. House Financial Services Committee in early March. His
continued leadership likely negatively impacted the bank's recovery efforts so his move to step down should be applauded.
Wells Fargo's decision to find an external candidate to serve as CEO is the "most effective way" for the bank to fully move past
the fake account opening scandal, Long said. However, the company needs to show more than just a competent CEO replacement before
it can "fully return to playing offense."
Wells Fargo's 2019 should show another year of declines and profit metrics will fall short of its peers. In fact, the bank will
likely find it difficult to match 2013's EPS of $1.00 per quarter. Also important to consider is what impact a new CEO could make
changes to current initiatives that are showing signs of improving profitability.
Price Action
Wells Fargo was trading higher by more than 2 percent at $50.10 per share Friday morning.
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Photo via Wikimedia.
Latest Ratings for WFC
Date |
Firm |
Action |
From |
To |
Mar 2019 |
Deutsche Bank |
Downgrades |
Buy |
Hold |
Mar 2019 |
Raymond James |
Upgrades |
Underperform |
Market Perform |
Jan 2019 |
RBC Capital |
Upgrades |
Underperform |
Sector Perform |
View More Analyst Ratings for
WFC
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Ratings
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