Baird Upgrades Wells Fargo to Neutral, Keeps $85 Target After 5.6% Q4 Gain
Baird upgraded Wells Fargo to Neutral from Underperform, kept its $85 target unchanged after an 8.2% YTD selloff improved the risk/reward profile. Q4 net income rose 5.6% to $5.4 billion and EPS climbed 13.3% to $1.62, loans up 8% to $986.2 billion; management foresees 5.2% net interest income growth to $50 billion.
1. Rating Upgrade and Target Price
Baird upgraded Wells Fargo to Neutral from Underperform, maintaining an $85 target price after an 8.2% year-to-date stock decline that enhanced the risk/reward profile.
2. Q4 2025 Financial Results
Wells Fargo reported Q4 net income of $5.4 billion, up 5.6% year-over-year, with EPS rising 13.3% to $1.62 and return on average equity improving 52 basis points to 12.3%.
3. Balance Sheet Trends
The bank’s loan balances expanded 8% to $986.2 billion, driven by a 12% gain in commercial loans, while deposits grew 4% to $1,426.2 billion; net interest margin contracted 10 basis points to 2.60%.
4. 2026 Guidance
Management projects net interest income of $50 billion for 2026, up 5.2%, supported by mid-single-digit loan and deposit growth and anticipating two to three Federal Reserve rate cuts.