5 Best Diversified Bank Stocks to Buy Now

3. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 87

Wells Fargo & Company (NYSE:WFC) is a diversified banking company providing investment, mortgage, and consumer and commercial finance products and services. It is based in San Francisco, California.

Analysts at Odeon Capital hold a Buy rating on Wells Fargo & Company (NYSE:WFC) shares as of April 17.

Analysts have placed an average price target of $47.04 on Wells Fargo & Company (NYSE:WFC) shares, with a high forecast of $55. The shares were trading at $39.75 on April 29. This gives the stock an upside potential of 18.34%.

There were 87 hedge funds long Wells Fargo & Company (NYSE:WFC) in the fourth quarter. Their total stake value was $5.6 billion.

Investment management firm, Davis Advisers, mentioned Wells Fargo & Company (NYSE:WFC) in its annual 2022 investor letter. Here’s what the firm said:

“Our investment thesis for our next largest bank investment, Wells Fargo, is totally different. As is well known, Wells Fargo & Company (NYSE:WFC) is the country’s third-largest bank, serving one in three U.S. households. Years of regulatory missteps under prior managements resulted in reputational damage, higher-than-average expenses, numerous consent orders, caps on asset growth, all added to the negative impact of low rates on their interest income. However, where others see bad news, we see resiliency and gradual improvement. Wells Fargo’s resiliency is reflected in the fact that despite years of terrible headlines and congressional hearings, Wells Fargo’s core customers stayed put and customer attrition remains extraordinarily low.

As to gradual improvement, new management has made steady headway in closing consent orders, settling regulatory matters and upgrading systems. Thus, rather than increasing profits from growth, Wells Fargo’s earnings growth for the next three-to-five years should come from the combined tailwinds of rising interest income, partially offset by normalizing credit costs, reduced expenses as systems improve and the scandals of the last decade are gradually put behind them, and the return of excess capital through share repurchases and rising dividends. The hypothetical earnings bridge displayed in Figure 6 gives some sense of the earnings power we see unfolding in the years ahead for this durable financial franchise.

While our grounded optimism carries the day, we are mindful of the risk that Wells Fargo’s historically excellent credit culture may have deteriorated, or that exasperated regulators may choose to extract even more major penalties for past infractions.”