Lower revenues only partly offset by lower costs
Despite the greater clarity provided by management at the investor day, we have lowered our FY19 and FY20 EPS forecasts by ~3%. With the impact of the Consent Order extending into 2019 and management providing cautious guidance, our lower revenue forecasts more than offset the positive news on costs and capital. We have lowered our price target to $60 (from $62) reflecting our forecast changes. In our view, WFC is trading at an appropriate level of 1.6x TBVPS, which reflects our forecast FY20 ROTE of 16.0% and we therefore retain our Neutral rating.Wells Fargo & Company is a financial and a bank holding company. Through its subsidiaries, the company provides banking, investment and mortgage products and services, as well as consumer and commercial finance. The company provides consumer financial products and services including checking and savings accounts, credit and debit cards, and automobile, student, mortgage and home equity and small business lending, as well as financial planning, private banking, investment management, and fiduciary services. The company also provides financial solutions including commercial loans and lines of credit, letters of credit, asset-based lending, trade financing, treasury management, and investment banking services.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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