Wells Fargo rises as Morgan Stanley upgrades to “overweight”
WFC•Wells Fargo shares rose 0.9% after Morgan Stanley upgraded the stock to “overweight” from “equal-weight.” Morgan Stanley expects net interest margin to stabilize, supporting net interest income growth.
1. Upgrade rationale
Morgan Stanley said Wells Fargo’s net interest margin is expected to stabilize as balance-sheet growth slows and the bank uses more lower-cost funding. It also said higher rates provide additional support, as Wells Fargo screens as the most asset-sensitive money center bank. The bank is set to report third-quarter earnings on Oct. 13.
2. Analyst views
Eighteen of 26 brokerages rate the stock “buy” or higher, while eight rate it “hold”; the median price target is $100. Wells Fargo maintains a $102 price target. The stock is down 13% year to date, compared with a 0.3% gain for the S&P 500 banks index.
