Shares of Wells Fargo & Co. (WFC) hiked up 3.1% in morning trading Tuesday toward a 10-month high, after UBS analyst Saul Martinez said it's time to buy into the bank, citing valuation and an opportunity for the bank to "find redemption" in the eyes of many different stakeholders. Martinez raised his rating to buy from neutral and raised his stock price target to $41 from $23, saying Wells Fargo is now his "top pick" within the large-capitalization banks sector. He said despite the stock's recent relatively big bounce, it is still a "sizable multiyear underperformer" since the sales scandal in 2016. "However, the company's weaknesses could turn into investment positives," Martinez wrote in a note to clients. "In fact, even modest improvements in efficiency and slight reductions to loan loss reserves yield outsized earnings benefits." Wells Fargo's stock has run up 33.4% over the past three months while the SPDR Financial Select Sector ETF (XLF) has surged 22.7% and the S&P 500 has gained 7.7%, but over the past 12 months, Wells shares have tumbled 34.7% while the financial ETF has tacked on 2.0% and the S&P 500 has advanced 16.5%. Martinez said the risk-versus-reward profile of Wells Fargo's stock appears "asymmetrically positive."
-Tomi Kilgore; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
January 12, 2021 09:35 ET (14:35 GMT)
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