Wells Fargo & Company (WFC) is getting another look from Wall Street, and the thesis is pretty straightforward: this is a bank that spent years stuck in regulatory purgatory and is now finally getting a chance to show what it can actually do.
The backstory matters here. Wells Fargo entered a completely different era last year when regulators lifted the 2018 Federal Reserve asset cap, along with several other consent orders that had been hanging over the bank like storm clouds. That cap had effectively put a ceiling on how big the bank could grow, which meant lost deposit share, stunted lending growth, and a franchise that couldn't operate at full efficiency.
Now that those constraints are gone, Bank of America Securities analyst Ebrahim H. Poonawala thinks the upside is real. He reiterated his Buy rating on Wednesday and bumped his price target from $100 to $107.
The Turnaround Thesis
Poonawala's argument is that Wells Fargo remains a long-term turnaround story with multiple catalysts still ahead. The bank has room to boost productivity and expand its product offerings beyond just covering the costs tied to regulatory cleanup. He sees a normalized return on tangible common equity in the high-teens as entirely achievable, which could eventually drive shares toward or above two times tangible book value.
The numbers tell the story. Poonawala is forecasting earnings per share of $7.07 for fiscal 2026 and $8.21 for fiscal 2027. That translates to average annual earnings growth of about 15% over those two years. The drivers? Margin expansion, modest balance sheet growth, and operating leverage, with efficiency gains hitting roughly 200 basis points by 2027.
Capital and Margins
On the capital front, Poonawala expects the CET1 ratio to trend toward 10.25%, down from 11% in the third quarter. That's not a red flag; it's a sign the bank is putting capital to work rather than just sitting on it.
As for net interest income, rate cuts could create some headwinds. The analyst's model assumes two rate cuts and about a three-percent drag on net interest income. But he believes repricing and growth should offset most of that impact.
Looking further out, Poonawala expects return on tangible common equity to hit 17% by 2027 and climb near 18% by 2028. The longer-term story is about self-help initiatives and scale advantages that should keep earnings climbing and support the stock over time.
Where the Stock Stands
Wells Fargo shares were down 2.32% at $94.15 on Wednesday, though the stock remains close to its 52-week high of $97.76. Even with the dip, the broader narrative is one of a bank that's finally turning the page after years of playing defense.
