MW Don't buy Wells Fargo's stock at current prices, analyst says

By Steve Gelsi

Analyst downgrades Wells Fargo's stock by two notches and upgrades U.S. Bancorp shares as regional banks gain favor after big runups by the largest banks

A big rally in Wells Fargo & Co.'s stock since it announced the lifting of an asset cap by the U.S. Federal Reserve last month leaves the megabank fully valued at a time when regional bank stocks offer more potential upside, an analyst at Raymond James said Monday.

Wells Fargo's stock (WFC) dropped 0.8% in premarket trading after Raymond James analyst David Long downgraded the megabank's shares by two notches, to market perform from strong buy.

Long has an $84 target for the stock, which is roughly in line with Thursday's record close of $83.60. The stock has run up 10.5% since the Fed's asset cap was lifted on June 3.

Also read: Wells Fargo just got a green light from the Fed to grow. Here's what it means for its business and its stock.

"We see lower upside potential for [Wells Fargo] shares relative to some of its peers despite our favorable fundamental outlook," Long said. "Despite lowering our rating, we continue to like Wells' potential to growth and improve profitability."

Long is now a minority on Wall Street, as 18 of the 27 analysts surveyed by FactSet who cover Wells Fargo's stock are bullish. He's now one of the eight who are neutral, while there's one bearish analyst.

Investor sentiment may soon pivot toward "less-expensive" regional banks and away from megabanks such as Wells Fargo, JPMorgan Chase & Co. (JPM), Bank of America Corp. $(BAC.SI)$ and Citigroup Inc. (C) because their stocks are all trading within 1% of their 52-week highs, Long said.

Looking at year-to-date results, these banks have all put up double-digit percentage gains, led by a 26% gain from Citigroup's stock, followed by a 23.5% rise from JPMorgan Chase, and an 11.3% jump by $Bank of America Corp(BAC-N)$. Wells Fargo's stock has risen 19% in 2025.

Meanwhile, the Financial Select Sector SPDR ETF XLF is up 10%, the KBW Nasdaq Bank Index BKX has risen 14.1%, but the SPDR S&P Regional Banking ETF KRE is only up 4.8%.

U.S. Bancorp (USB), a large regional bank based in Minneapolis, was upgraded by Raymond James to strong buy from outperform, with a new price target of $57 a share, up from $51.

"We have increasing confidence that the bank will reach its targeted medium-term profitability," Long said. "We expect such profitability improvement to shift investor sentiment on this 'show me' storyto the positive side."

The stock offers a "unique buying opportunity" due to a lack of confidence among Wall Street analysts in its ability to reach medium-term profitability, Long said

U.S. Bancorp's stock was up 0.6% in premarket trading on Monday.

Also read: Goldman's stock surges to another record, as the 'big winner' of Fed's stress tests.

-Steve Gelsi

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July 07, 2025 08:43 ET (12:43 GMT)

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