On Wednesday, Goldman Sachs (NYSE:GS) reaffirmed its Buy rating on Wells Fargo & Company (NYSE:WFC) shares, maintaining a price target of $77.00. Wells Fargo reported fourth-quarter earnings per share (EPS) of $1.43, surpassing the Visible Alpha Consensus Data and Goldman Sachs estimates of $1.36 and $1.34, respectively. However, after adjusting for one-time items, core EPS was $1.34, falling short of the anticipated figures of $1.48 and $1.50.
Despite the discrepancy in core earnings, analysts project a positive investor response, driven by stronger-than-expected quarterly net interest income (NII) and encouraging NII guidance for 2025. Wells Fargo anticipates a year-over-year growth of 1-3% in NII, suggesting a midpoint value of $48.6 billion, compared to the consensus estimate of $47.1 billion.
The bank's 2025 expense guidance of $54.2 billion aligns closely with street estimates, which is expected to balance out a weaker core pre-provision net revenue (PPNR) for the quarter. According to InvestingPro, three analysts have recently revised their earnings estimates upward, and the company maintains a strong dividend track record with 54 consecutive years of payments.
The bank's quarterly trends indicated a slight decline in core PPNR due to a 6% reduction in core fee income, particularly in deposit fees and capital markets, and a roughly 275 basis point decrease in core efficiency compared to consensus expectations. However, these were partly compensated by a 1% increase in NII relative to street forecasts, attributed to a net interest margin (NIM) of 2.70%, which is higher than the expected 2.66%.
Wells Fargo's Standardized Common Equity Tier 1 (CET1) ratio saw a quarter-over-quarter drop of 20 basis points to 11.1%, which is approximately 10 basis points below the consensus. The bank executed $4.0 billion in buybacks, exceeding Goldman Sachs' estimates of $3.4 billion. Tangible book value per share decreased by 1% quarter-over-quarter to $41.24, and core return on tangible common equity (ROTCE) was reported at 13.0%.
Looking ahead, analysts are seeking further details on various aspects of Wells Fargo's guidance, including the breakdown of the 2025 NII growth, the trajectory of fee income increases, the robustness of the 2025 expense outlook, expectations for credit normalization, and the bank's capital deployment strategy in light of potential regulatory shifts with the new U.S. presidential administration.
InvestingPro subscribers have access to 10 additional exclusive ProTips and comprehensive financial metrics that provide deeper insights into Wells Fargo's performance and outlook. The company maintains a "Fair" overall financial health score, with particularly strong momentum metrics.
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