NEW YORK ( TheStreet) -- Saying the stock's valuation was "too attractive to ignore," FBR analyst Paul Miller on Tuesday upgraded his rating for Wells Fargo (WFC - Get Report) to "Outperform" with a price target of $31.00.
Miller's target would be a 35% gain from Monday's closing price of $22.93. Wells Fargo's shares declined 9% on Monday, following last week's 9% decline.
Bank of America (BAC - Get Report) led the largest U.S. banking names down, as its shares dropped 20% to close at $6.51. Miller continues to rate the nation's largest bank holding company "Outperform" with a price target of $12.00.
The analyst said that Wells Fargo was replacing PNC Financial Services (PNC - Get Report) among his firm's "top picks" in the banking space, although PNC continues to be rated "Outperform" by FBR, with a $70 price target.Miller said the Wells Fargo upgrade "presumes that bank investors will flock to quality names that can best weather the adverse effect of a flattening yield curve," and that "the company's strong deposit franchise, diverse business lines, and solid mortgage origination platform position it well to sustain a healthy" net interest margin, with "77% of its funding base coming from core Deposits." A bank's net interest margin is the spread between a bank's average yield on loans and investments and its average cost for deposits and wholesale borrowings. The analyst also touted Wells Fargo's "decline in non-interest operating expenses, coupled with lower net interest income,
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