Wells Fargo & Co WFC

After doing a more thorough update to our projections, we are increasing our fair value estimate for Wells Fargo to $52 per share from $45. Roughly $1 of this increase is due to the time value of money while the remaining $6 is driven by a combination of an expectation of lower credit costs in the short to medium term and slightly higher longer-term fee income. We still see Wells Fargo as uniquely undervalued within our U.S. banking coverage, where we see most other names as already pricing in a more positive future economic environment and as therefore roughly fairly valued. In contrast, we think Wells Fargo still has idiosyncratic catalysts left that should warrant higher revaluations. We are also lowering our uncertainty rating to medium from high, as economic uncertainty stemming from the pandemic has declined.