Wells Fargo Looks to Benefit From Fannie Freddie and the Fed
Bove lifted his Wells Fargo price target to $58.50 from $51.50. Shares were up 0.36% Thursday to $49.85, slightly shy of their 52 week high of $50.49 reached April 4.
"There is no company in the country better positioned to take advantage of the shift in government mortgage policies. The internal adjustments made by the bank in pricing servicing and in the cost of originating loans suggest that mortgage activity will be a big source of company income very soon," Bove wrote.
Bove's report is one of the most bullish to emerge from the San Francisco-based banking giant's investor day earlier this week. He conceded his takeaway from the presentations were "mainly intangible." Among them: "The company has created a culture that results in the development of long-tenured employees with a deep knowledge of the bank's product array," and "it is everywhere in the country with every financial product."
Most analysts left price targets unchanged following the presentation.
Deutsche Bank analyst Matt O'Connor, who rates Wells Fargo a "hold," had no problems with the presentation but is concerned about growth in the overall economy.
"We wonder how much GDP growth can accelerate if consumer under-writing standards remain tight, growth remains sluggish at the biggest banks, and the Fed continues to dial back asset purchases," O'Connor wrote.
Nonetheless, O'Connor said he believes Wells Fargo is "well-positioned vs. most peers for higher interest rates."
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-- Written by Dan Freed