Wells Fargo's Q4 Results Impress, Analysts Weigh In On Growth, Expense Outlook

Wells Fargo & Co. (WFC) reported strong fourth-quarter results, surpassing analysts' expectations and driving a surge in its stock price. The bank's earnings profile continues to improve, with a solid performance in fee income and a promising outlook for 2025. Here's a closer look at Wells Fargo's Q4 results and the insights from analysts who weighed in on the bank's growth and expense outlook.

Q4 Results Beat Expectations

Wells Fargo reported net income of $5.1 billion, or $1.43 per diluted common share, up 47% year over year. Revenue remained almost flat at $20.38 billion, with net interest income (NII) falling 7% to $11.84 billion due to lower rates on floating rate assets and lower loan balances. However, NII was higher than expected, driven by a rebound in dealmaking activity and strength in the fee income franchise.

Noninterest income increased 11% to $8.54 billion, driven by improved results from venture capital investments, higher asset-based fees in Wealth and Investment Management, and higher investment banking fees. The bank's investment banking fees jumped 59% to $725 million in the quarter compared with a year earlier.

Analysts Weigh In On Growth, Expense Outlook

Keefe, Bruyette & Woods analyst David Konrad maintained a Market Perform rating on Wells Fargo while raising the price target from $81 to $86. He highlighted the 4% sequential growth in non-interest-bearing deposits, which funded modest loan growth and reduced borrowings. Konrad also noted that Wells Fargo is transitioning from cost-cutting to revenue growth, with the NII growth outlook for 2025 of between 1% and 3% being much better than expected.

Goldman Sachs analyst Richard Ramsden reaffirmed a Buy rating on Wells Fargo, lifting the price target from $77 to $83. Although Wells Fargo's core earnings missed expectations, Ramsden noted that the bank's NII growth outlook for 2025 was better than expected. However, management guided to expenses of $54.2 billion for 2025, which represents a decline of around $400 million versus last year and missed the Street's expectations of $54.4 billion.

Truist Securities analyst John McDonald reiterated a Buy rating and price target of $82 on Wells Fargo. He noted that the bank's 2025 NII growth outlook reflects sequentially flat NII in the first half of the year, despite two fewer days in the first quarter. Sequential growth is expected in the back half, with the outlook assuming up to two interest rate cuts by the Federal Reserve and low-to-mid single-digit percentage average loan growth.

Conclusion

Wells Fargo's Q4 results impressed investors, with strong fee income growth and a promising outlook for 2025. Analysts weighed in on the bank's growth and expense outlook, with most maintaining a positive stance on the stock. As Wells Fargo continues to improve its earnings profile and diversify its revenue streams, investors may want to consider the bank as a solid addition to their portfolios.