After reducing its workforce by nearly 40,000 since the third quarter of 2020, Wells Fargo (NYSE:WFC) could cut more jobs in the future. Speaking at the Barclays Global Financial Services Conference, the company’s CFO, Michael P. Santomassimo, said that the firm has significantly lowered its headcount and expects further layoffs.
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The move is a part of the bank’s effort to drive efficiency and support earnings. Meanwhile, Santomassimo remains optimistic on the NII (Net Interest Income) front and reiterated the bank’s full-year guidance. WFC expects its NII to increase by approximately 14% year-over-year in 2023. Higher interest rates and increased loan balances are expected to support NII growth. However, the anticipated decline in deposits could continue to be a drag.
Wells Fargo has performed exceptionally well in the first half of 2023. The bank’s top and bottom lines benefited from higher interest rates and its focus on controlling expenses. In Q2 2023, WFC’s revenue increased to $20.53 billion from $17.04 billion in the prior-year quarter, reflecting a 29% year-over-year increase in NII. At the same time, EPS (earnings per share) jumped to $1.25 from $0.75 in the prior-year quarter.
While Wells Fargo focuses on improving efficiency and lowering costs, let’s look at what Street recommends for its stock.
Is Wells Fargo Stock a Good Buy Now?
Redburn Atlantic analyst John Heagerty finds Wells Fargo’s valuation attractive and has a Buy recommendation on the stock. Further, the analyst increased the price target on WFC stock to $52.50 from $50 on August 1. On the other side, HSBC analyst Saul Martinez initiated coverage on Wells Fargo stock with a Hold recommendation on September 7. Martinez expects the NIIs of most banks to decline.
Against this backdrop, Wells Fargo stock has received 10 Buy and eight Hold recommendations for a Moderate Buy consensus rating on TipRanks. Meanwhile, analysts’ average price target of $49.25 implies 15.77% upside potential from current levels.
