UPDATE: Nomura Equity Research Initiates Coverage on Wells Fargo & Company with Buy Rating, $42 PT

In a report published Wednesday, Nomura Equity Research initiated coverage on Wells Fargo & Company

with a Buy rating and $42.00 price target. Nomura Equity Research noted, “Initiate with a Buy rating. Wells Fargo & Company is a consistently solid performer with a top-shelf franchise (13% ROE and 1.4% ROA in 2012 and 12 consecutive quarters of record earnings). We think EPS will grow at a mid- to high-single-digit pace in the next two years as NII grows, expenses head lower and credit costs continue to improve. Shareholders will be rewarded with capital returns, including a ~3% dividend yield and share buybacks. While we expect mortgage activity to again be strong in 2013, we have baked in a 25% decline in mortgage banking income for 2013 and a 23% decline in 2014, which might prove conservative. We believe valuation is attractive at 9x 2014E.” Wells Fargo & Company closed on Tuesday at $34.76.