Wells Fargo: Recent Share Price Appreciation Has Reduced Margin of Safety for Prospective Investors

Wide-moat-rated Wells Fargo’s shares have rallied roughly 30% from their October-end lows as the market got excited about the prospects of interest rate cuts by the Fed in 2024. The company is slightly undervalued and is trading at a price/fair value estimate of around 0.90. At these valuation levels, we think the margin of safety has reduced materially. Nonetheless, we think investors might find an entry point should current rate cut expectations reverse or new regulatory challenges emerge. We do not plan to materially change our $55 fair value estimate for Wells Fargo as we fully incorporate fourth-quarter results.