Skip to Content
Stock Analyst Update

Wells Fargo Isn't Out of the Woods Yet

Though we think the wide-moat bank's competitive advantages are intact, further changes may be needed to catalyze a comeback in the eyes of investors.


Just a week after CEO Tim Sloan dismissed “sensational headlines” related to  Wells Fargo's (WFC) past misdeeds (and a month after another $1 billion settlement with regulators), the company acknowledged that employees of the bank’s wholesale division altered information on customer accounts.

We don’t think the latest reports are too surprising--Wells Fargo has more than a quarter of a million employees, and the firm’s practices are being examined with a fine-toothed comb by regulators and managers. Nor do we believe the latest revelations are material to the firm’s financial prospects, as the alterations do not appear to have generated any additional revenue. Instead, mundane information was being added outside of proper channels.

The bigger question, given management’s comments and the fact that this particular behavior continued into 2018, is whether top management is truly intent on conducting a ruthless transformation of the company’s culture. Former CEO John Stumpf lost his job because he was not taking the bank’s problems seriously enough, and regulators are clearly not happy with the changes that have been made so far. Notably, Sloan was the second in command as the first scandal broke. The company is the subject of a consent order limiting growth, and regulators appear to have influenced the board changes made this year. 

We believe the wide-moat bank’s competitive advantages are intact, and that it is undervalued relative to our $65 per share fair value estimate. However, we don’t believe it is out of the woods yet, and further changes may be needed to catalyze the company’s comeback in the eyes of customers and investors. 

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Jim Sinegal does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.