Wells Fargo Gets Its First Oppenheimer Downgrade Since 2009

NEW YORK (TheStreet) -- Wells Fargo (WFC) was lowered to "perform" from "outperform" Monday by Oppenheimer, following its release of fourth quarter earnings Friday, which beat Street expectations but showed the giant lender's margins under pressure due to the low interest rate environment.

"Despite being heavily conflicted about a downgrade now, our bottom line is that we believe there is better upside elsewhere," wrote analyst Chris Kotowski, noting he had been recommending Wells since 2009. Names where he argues there is "a lot more upside," include Citigroup (C) Morgan Stanley (MS)and KKR (KKR).

Wells Fargo earned $9.55 billion before taking into account money set aside to cover bad debts. That beat Oppenheimer's estimate of $9.49 billion, as well as the third quarter number of $9.10 billion and the $8.10 billion profit of a year ago. Still, net interest income was flat in the quarter despite 1.3% loan growth, Kotowski noted.

"This is obviously manageable given the good growth in fees and will self-correct when rates rise, but it takes some oomph out of otherwise positive comparisons," Kotowski wrote.

Wells Fargo shares were down 0.99% to $34.75 in early trading. Shares of other big banks, including Bank of America (BAC), Citigroup, Morgan Stanley and JPMorgan Chase (JPM) were also lower.

-- Written by Dan Freed in New York.

Follow @dan_freed

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.