Wells Fargo Downgraded to Market Perform from Strong Buy by Raymond James

Wells Fargo Downgraded to Market Perform from Strong Buy by Raymond James

Wells Fargo (WFC) shares experienced a 0.6% drop to $83.09 in premarket trading on July 2, 2025, following a downgrade from Raymond James. The brokerage firm reduced its rating for Wells Fargo from 'strong buy' to 'market perform' [1], citing limited upside potential after the stock's recent rally.

The decision to downgrade comes as Raymond James believes the upside to its earnings per share (EPS) estimates is now appropriately reflected in the bank's premium valuation. Wells Fargo shares closed up 1.5% at $83.60 on Thursday, July 3, just pennies away from Raymond James' $84 price target [2]. Despite the downgrade, Raymond James remains bullish on Wells Fargo's growth prospects and continued profitability improvement.

Investor sentiment may shift away from mega-cap banks like Wells Fargo towards less-expensive regional banks, according to Raymond James. This shift is driven by the recent strong performance of regional banks, which have gained favor among investors [3]. The Financial Select Sector SPDR ETF (XLF) is up 10%, while the SPDR S&P Regional Banking ETF (KRE) has only risen 4.8% year-to-date [3].

Wells Fargo's stock has risen 19% year-to-date (YTD), but the brokerage believes the stock is now fully valued. The bank's shares trade at 12.4 times Raymond James' 2026 earnings per share estimate, representing a premium to its peer group average and median of 11.0 times [2]. Despite the downgrade, 17 of 25 brokerages rate the stock "buy" or higher and 8 "hold"; the median price target is $83 [1].

Wells Fargo's Chief Financial Officer indicated that consumer loan growth might remain muted or decline, while commercial loan growth remains uncertain. However, the bank sees growth opportunities in investment banking and other business areas [2]. The Federal Reserve's stress test results showed that major banks, including Wells Fargo, have strong capital positions to withstand economic downturns [2].

References:
[1] Reuters. (2025). Wells Fargo dips after Raymond James downgrades to market perform. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3SZ1CR:0-wells-fargo-downgrades-to-market-perform/
[2] Investing.com. (2025). Wells Fargo stock rating cut to market perform by Raymond James. Retrieved from https://www.investing.com/news/analyst-ratings/wells-fargo-stock-rating-cut-to-market-perform-by-raymond-james-93CH-4124267
[3] Morningstar. (2025). Don't buy Wells Fargo's stock at current prices, analyst says. Retrieved from https://www.morningstar.com/news/marketwatch/2025070752/dont-buy-wells-fargos-stock-at-current-prices-analyst-says