State Street price target raised by $3 at Wells Fargo, here’s why

Wells Fargo raised the firm’s price target on State Street to $86 from $83 and keeps an Overweight rating on the shares. The downward re-rating of bank stocks should reverse in 2024, the analyst tells investors in a research note. The firm says that since 2019, banks increased core earnings by 15% even while bank stocks declined by over 20% and underperformed the S&P 500 by 65%. Wells believes fear of rates, recession, and regulation “has overtaken the reality of performance.” It concludes that banks should re-rate back toward historical valuations, “especially as fears (most of the time) do not materialize.” Citi (C) replaces JPMorgan (JPM) as the firm’s top large cap bank pick, followed by Fifth Third (FITB), US Bancorp (USB), JPMorgan, Bank of America (BAC), State Street (STT) and PNC Financial. Wells’ bottom picks are First Hawaiian (FHB), BOK Financial (BOKF), First Interstate Bancsystem (FIBK) and Commerce Bancshares (CBSH).