Raymond James Downgrades Wells Fargo & Company (WFC) Stock to Market Perform

Wells Fargo & Company (NYSE:WFC) is one of the Best Large Cap Value Stocks to Invest In. Raymond James downgraded the company’s stock from “Outperform” to “Market Perform,” noting the limited upside potential. While the firm maintains its bullish outlook on Wells Fargo & Company (NYSE:WFC)’s growth prospects as well as continued profitability improvement, it opines that the upside to earnings estimates is appropriately reflected in premium valuation.

S&P Global believes that the lifting of the Federal Reserve’s asset growth restriction on Wells Fargo & Company (NYSE:WFC), along with the termination of regulatory consent orders against the company, demonstrates significant improvement in its governance and risk management. The asset cap’s termination is expected to provide Wells Fargo & Company (NYSE:WFC) opportunities to compete for new business and deposits, added S&P Global. Overall, the firm’s positive outlook demonstrates its expectation that Wells Fargo & Company (NYSE:WFC) will improve its risk management oversight and that the risk-adjusted returns will rise.

According to S&P Global, Wells Fargo & Company (NYSE:WFC) remains well-placed to handle an economic slowdown or a deterioration in the asset quality. The company tends to benefit from the scale of a universal bank as well as a less complex business mix, which is similar to a large regional bank. Furthermore, the revenue remains well balanced and is not overexposed to any specific area.

Hotchkis & Wiley, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“Wells Fargo & Company (NYSE:WFC) is one of the nation’s largest depositories and banks by assets. In addition to having a very high market share of deposits, they also enjoy high market share within the geographies they operate in such as western and southeastern US. In our opinion, WFC is one of the best franchises in banking with a history of very high returns on assets and equity. Performance over the quarter was strong due to potential deregulation with the onboarding of a new presidential regime and speculation that the company’s asset cap could be lifted as early as 1H25.”

While we acknowledge the potential of WFC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.