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Wells Fargo Doesn't Deserve To Be A Lot Higher: Morningstar Analyst

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Wells Fargo Doesn't Deserve To Be A Lot Higher: Morningstar Analyst
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Wells Fargo & Co (NYSE: WFC) reported its first-quarter results earlier on Tuesday. The company declared an EPS of $1.04 for the quarter, above analysts' estimates of $0.98.

Dan Werner from Morningstar was on CNBC Tuesday to break down Wells Fargo's earnings.

No Real Surprises

"Highlights are: the continued loan growth that we continue to see from Wells Fargo. We still see margin compression and the continued credit quality improvement," Werner said.

"We have lowered charge offs, but the provisions are starting to come up a little bit or not release as much loan-loss reserves."

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He continued, "So, overall a pretty good quarter. So, not a whole lot surprises in terms of what they have done in the recent past and what banks are facing in terms of the revenue pressures and regulatory pressures that they are seeing."

Challenges Ahead

Werner was asked if he feels Wells Fargo stock deserves to be much higher than where it is now. He replied, "I won't say it deserves to be a lot higher, because it is slightly above our fair value estimate at this point."

He explained, "I think there are still challenges ahead. I think that the margin spread or the margin at this point is still under pressure. We still see lower yields on loans as Wells showed this quarter.

"It was down about 8 basis points again. So, I think the revenue pressures are still there from the spread business. So, it seems as though, that they are trying, as with most banks, they are either trying to grow their balance sheet or they are trying to grow some of their fee businesses that they have," Werner extrapolated.

 
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Latest Ratings for WFC

DateFirmActionFromTo
Dec 2016SusquehannaDowngradesPositiveNeutral
Nov 2016Deutsche BankMaintainsBuy
Nov 2016JefferiesDowngradesBuyHold

View More Analyst Ratings for WFC
View the Latest Analyst Ratings

Posted-In: Dan Werner morningstarAnalyst Color CNBC Analyst Ratings Media Best of Benzinga

 

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