Morgan Stanley analyst Manan Gosalia has upgraded Wells Fargo from equal weight to overweight, designating it as a top pick with a price target of $102, which suggests a 27% upside from its recent closing price.
Despite Wells Fargo's shares being down 14% year-to-date, trailing behind competitors like JPMorgan Chase and Citigroup, Gosalia believes that the bank's normalizing balance sheet growth will alleviate funding pressures and stabilize its net interest margin, a critical profitability metric.
He views 2026 as a pivotal year for Wells Fargo, predicting that as growth stabilizes, the bank will see improved earnings through reduced margin dilution and enhanced revenue from existing clients. The stock is currently considered undervalued at 1.5 times its 2027 tangible book value per share, presenting a significant buying opportunity.
Following the upgrade, Wells Fargo shares rose over 1% in premarket trading. Overall, 18 out of 26 analysts covering the stock maintain a buy or strong buy rating, with an average price target suggesting a 24% upside