Shares of Wells Fargo & Co. (NYS:WFC) rose 0.3% in afternoon trading Friday, after UBS analyst Saul Martinez backed away from his bearish view on the bank, citing potential expense leverage and a more balanced risk-vs.-reward profile given the stock's underperformance this year. The stock has tumbled 55.2% year to date, while the PHLX/KBW Bank Index (AMERICAN:BKX) has dropped 33.0% and the S&P 500 (S&P:SPX) has gained 2.9%. From the post-COVID-19 closing lows, Wells's stock has gained just 7.0% while the bank index has rallied 35.2% and the S&P 500 has soared 48.6%. UBS's Martinez raised his rating to neutral, after being at sell the past four months, and lifted his price target to $24 from $21. He said that while revenue headwinds persist, he has greater confidence in expense reductions and sees potential for multiple expansion towards peer levels as valuations have been discounted to after the stock's underperformance. "Unlike many banks, Wells Fargo has ample room to reduce costs beyond 2022, an important differentiator in a persistently low interest rate environment," Martinez wrote in a note to clients.
Sept. 11, 2020, 1:26 p.m. EDT