Wells Fargo Upgraded to BUY on Post-Asset Cap Growth Momentum, US$98 Target Price April 28, 2026
Wells Fargo & Company has been upgraded to BUY from Accumulate with an unchanged target price of US$98, as the bank demonstrates strong operating momentum following the removal of regulatory constraints. The American multinational financial services company, one of the largest banks in the United States, has successfully closed its final outstanding consent order in March 2026, marking the end of a prolonged regulatory oversight period.
Strong Financial Performance Across All Segments
Wells Fargo delivered solid first-quarter 2026 results, with earnings rising 7% year-on-year to US$5.3 billion. Revenue grew 6% to US$21.4 billion, driven by net interest income growth of 5% and non-interest income expansion of 8%. All business segments contributed to the revenue growth, demonstrating the bank’s broad-based recovery.
The dividend per share increased 13% year-on-year to US$0.45, whilst common stock net repurchases rose 14% to US$4 billion, reflecting management’s confidence in the bank’s financial position and future prospects.
Key Growth Drivers and Positive Momentum
Non-interest income has become a significant growth engine, rising 8% year-on-year to US$9.4 billion and now accounting for 44% of total revenue. This growth was led by investment advisory fees increasing 10% on higher market valuations and transactional activity, markets revenue surging 19% on stronger client activity, and card fees benefiting from nearly 60% growth in new credit card accounts.
The removal of the asset cap in June 2025 has unleashed significant growth potential. Average loans expanded 10% year-on-year to US$996 billion, whilst deposits grew 6% to US$1.42 trillion. Consumer Banking witnessed particularly strong momentum with auto originations more than doubling and consumer checking account openings up over 15%.
Challenges and Headwinds
Despite the positive momentum, Wells Fargo faces several headwinds. Net interest margin compressed 13 basis points year-on-year to 2.47% as deposits reprice in the current interest rate environment. Provisions trended higher by 22% year-on-year, reflecting normalisation of credit costs. Additionally, macro and geopolitical uncertainties pose ongoing risks to the operating environment.
The bank maintained its full-year 2026 guidance of approximately US$50 billion for net interest income and US$55.7 billion for expenses, with net interest income expected to build throughout the year on balance sheet expansion.
Frequently Asked Questions
Q: What was Wells Fargo's recommendation and target price?
A: Wells Fargo was upgraded to BUY from Accumulate with an unchanged target price of US$98.
Q: How did Wells Fargo's earnings perform in the first quarter?
A: Earnings rose 7% year-on-year to US$5.3 billion, whilst revenue increased 6% to US$21.4 billion.
Q: What drove the growth in non-interest income?
A: Non-interest income grew 8% year-on-year, led by investment advisory fees (+10%), markets revenue (+19%), and card fees from nearly 60% growth in new credit card accounts.
Q: How has the removal of the asset cap affected the bank?
A: Following the June 2025 asset cap removal, average loans grew 10% year-on-year to US$996 billion and deposits rose 6% to US$1.42 trillion.
Q: What are the main challenges facing Wells Fargo?
A: Key headwinds include net interest margin compression of 13 basis points to 2.47%, provisions trending higher by 22%, and macro and geopolitical uncertainties.
Q: What is Wells Fargo's guidance for 2026?
A: The bank maintained its full-year 2026 guidance of approximately US$50 billion for net interest income and US$55.7 billion for expenses.
Q: How did different business segments perform?
A: All segments delivered year-on-year revenue growth, with Wealth and Investment Management up 14%, Corporate and Investment Banking markets up 19%, and Consumer Banking up 7%.
Q: What milestone did Wells Fargo achieve regarding regulatory matters?
A: Wells Fargo closed its final outstanding consent order in March 2026, with all 14 consent orders now resolved and the asset cap removed.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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About the author
Glenn Thum
Glenn covers the Banking and Finance sector. He has had 3 years of experience as a Credit Analyst in a Bank, where he prepared credit proposals by conducting consistent critical analysis on the business, market, country and financial information. Glenn graduated with a Bachelor of Business Management from the University of Queensland with a double major in International Business and Human Resources.
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