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Wells Fargo & Co WFC

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Increasing Our Fair Value Estimate for Wells Fargo to $52 From $45

Eric Compton, CFA Senior Equity Analyst

Analyst Note

| Eric Compton, CFA |

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.

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Company Profile

Business Description

Wells Fargo is one of the largest banks in the United States, with approximately $1.9 trillion in balance sheet assets. The company is split into three segments for reporting purposes: community banking; wholesale banking; and wealth and investment management. The community banking segment serves consumers and small businesses with products including deposit accounts, credit and debit cards, and student, mortgage, and home equity loans. Wholesale banking includes corporate and commercial real estate lending, asset-based lending and trade financing, merchant services, and capital markets businesses. Wealth and investment management includes advisory, brokerage, retirement, and trust services. The bulk of Wells' lending takes place in the U.S.

420 Montgomery Street
San Francisco, CA, 94104
T +1 866 249-3302
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2019
Stock Type Cyclical
Employees 268,531