BofA Securities has maintained a Buy rating on Wells Fargo & Company (NYSE:WFC) shares and left its price target at $95, saying the stock is positioned to outperform as investors head into the bank's second-quarter earnings. The firm said a management update delivered at an investor conference is likely to support a gradual improvement in investor sentiment following the bank's weaker first-quarter performance.
Analysts at BofA said a clearer view of management's strategy, together with an improved growth outlook, underpins their conviction that Wells Fargo can deliver stronger returns. The research note specifically cited expectations that the bank could reach an 18% return on tangible common equity - ROTCE - potentially by 2028.
During the investor conference, Wells Fargo Chief Financial Officer Mike Santomassimo addressed several hot topics, including the outlook for net interest income, the potential impact of artificial intelligence on deposits, and growth trends within the markets business. Management reiterated confidence in a roughly $50 billion net interest income target, saying the business is tracking well despite shifts in interest rates.
Management acknowledged near-term pressure on net interest margin of about 3-4 basis points as deposit mix shifts, and emphasized this impact is expected and easing. The bank also reported that commercial deposit growth has accelerated since the lifting of the asset cap, largely driven by existing clients redeploying balances back to the institution.
Market-facing businesses are showing signs of inflection as balance sheet expansion supports deeper client relationships. Management reported equities and fixed-income revenues rising in the mid-to-high teens, and total markets revenues increasing by about 21%.
The investment banking expansion is gaining momentum, aided by strong hiring across advisory and equity capital markets, while wealth management has emerged as a meaningful growth contributor as prior investments in talent and technology begin to pay off.
On the consumer side, management highlighted ongoing improvement in retail banking, noting sustained checking account growth for either 11 or 12 consecutive quarters. The card portfolio is also moving from a drag on profits toward a positive contributor as vintages season, with card performance tracking at or above expectations.
Commercial banking continues to show robust client acquisition and share gains, with new client counts rising in the range of 20-40% year-over-year, according to management's update.
Context and implications - BofA's reiteration of a Buy rating and the $95 target rests on the combination of management's guidance, the trajectory for ROTCE, and improving revenue trends across markets, wealth, consumer and commercial businesses. Investors will be watching second-quarter results and subsequent execution against the guidance provided at the conference.