Wells Fargo’s strong rebound rally continues. How we’re playing the move higher
Wells Fargo shares rose again Monday amid fresh Wall Street research and a broader market gain. It is tempting to take profits on the Club stock, which has mounted a 10% rally since its lowest close of 2025 on March 10. However, Jim Cramer advised investors to hold on for a little longer. The analysts’ moves are not surprising since the stock, while working its way higher, was still roughly 9.5% below its record-high close of $81.42 per share on Feb. 6. The news Shares of Wells Fargo were up nearly 2.5% to start the new week as traders brushed off multiple price target cuts and, instead, focused on signals that the U.S. may avoid starting a full-blown trade war. One of the price target cuts came from Morgan Stanley, which took its Wells Fargo target to $79 per share from $86. That still represents roughly 9% upside to Friday’s close. While citing “higher uncertainty driven by trade policy and a slower economic growth outlook” for the move, the analysts on Monday reiterated their buy-equivalent rating. They pointed to a number of positive drivers for Wells Fargo once the 2018 Federal Reserve-imposed $1.95 trillion asset cap has been removed. “Where does Wells benefit when the asset cap is lifted? (1) Faster deposit growth, (2) faster earnings asset growth, (3) higher markets [net interest income], (4) higher trading revenues, (5) lower expenses, and (6) a halo effect across the whole organization as they will be able to pivot to growth initiatives,” the analysts wrote. WFC YTD mountain Wells Fargo (WFC) year-to-date performance Big picture The Fed asset cap and other regulatory penalties known as consent orders were levied against Wells Fargo due to a series of account scandals and other past misdeeds. Management has cleared five consent orders since the start of 2025. The timing of the cap’s removal remains uncertain, some media reports — albeit unconfirmed by the bank — have suggested that it could happen as early as this year. Dealing with those regulatory challenges comes during a turbulent year for bank stocks and the overall stock market due to President Donald Trump’s near-daily barrage of tariff threats. Fellow portfolio financial names BlackRock , Goldman Sachs , and Capital One have faced similar volatility. This marks a reversal from post-election gains on high hopes that another Trump administration would bring about a more lenient regulatory environment, along with a boost in dealmaking activity. Bottom line We’re glad to see the Monday boost in Wells Fargo stock and the run it has been on during the past couple of weeks. Still, investors shouldn’t jump the gun and make a sale just yet. We believe this financial name has much more upside ahead. Like Morgan Stanley, we see the asset cap removal as a key driver for the stock. This, coupled with a multi-year turnaround plan, were big reasons why we started a position in Wells Fargo to begin with. The cap removal will allow the bank to expand budding parts of its business mix such as investment banking, further diversifying the company’s revenue streams. Currently, Wells Fargo relies heavily on interest-based incomes, which are at the mercy of the Fed’s policy rate decisions. Wells Fargo’s operating losses would likely come down as well with the lifting of the asset cap because the bank has been spending billions on risk and control infrastructure to appease U.S. regulators. Last year, according to Bloomberg, Wells Fargo submitted a third-party review of its risk and control changes for Fed consideration. The report said a decision to remove the cap requires a vote by the full Fed board. Jeff Marks, the Investing Club’s director of portfolio analysis, said he wouldn’t be surprised if the cap were to be lifted in 2025. “They’re getting more and more consent orders closed,” he said during Monday’s Morning Meeting. “There’s a lot of momentum there.” (Jim Cramer’s Charitable Trust is long WFC, COF, BLK, GS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A pedestrian walks by Wells Fargo headquarters at 420 Montgomery Street on December 04, 2024 in San Francisco, California.
Justin Sullivan | Getty Images
