Wells Fargo & Co (WFC) — WFC stock jumped 2.2% on Wednesday, as banking stocks got a boost from the release of the April Fed meeting minutes, which pointed to the possibility of an interest rate hike next month.
Also on Wednesday, Benzinga reported that top raters from the Vetr community, which delivers crowdsourced ratings for stocks, raised their opinion of WFC stock. They now rate it 4.5 Stars (“Strong Buy”) out of 5.0, up from 4.0 Stars (“Buy”). With 85% of the Vetr crowd bullish on WFC stock, their average price target is $53.77.
This stands in stark contrast to recent downgrades from firms like Piper Jaffray. But S&P Capital IQ Equity Research reiterated its “Buy” rating and 12-month target of $57 for WFC stock last month following the company’s Q1 earnings beat.
Capital IQ analysts noted strong loan growth, helped by the acquisition of GE Capital assets. They expect this trend to continue, with nearly 8% loan growth projected this year.
This full-service bank holding company, which is the largest U.S. bank by lending assets and fourth largest by global assets, stands to benefit from interest rate hikes, as well as from higher energy prices since it has above-average lending exposure in energy-related loans.
Turning to the chart, WFC stock is still in a downtrend. However, a recovery channel is intact. And a buy signal from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR), was triggered on Friday and followed by high accumulation on Wednesday.
My first trading target for WFC stock is $52, which is nearly 7% above the current price. For longer-term investors, it is likely shares will make a run for the highs made in November and December near $56. If so, investors could see capital gains of more than 15%, in addition to the stock’s 3.1% dividend yield.
