Wells Fargo (WFC) ($36.50 vs. $34.85 on Feb. 6) has been downgraded to hold from buy with the stock 8.2% overvalued with a one-year price target at $38.14. WFC traded to a new multi-year high at $36.62 on Friday a level not seen since October 2008. The stock has gained 16.2% over the last twelve months with a reasonable twelve month forward P/E ratio at 10.13.
WFC has a positive but overbought weekly chart profile with its five-week MMA at $35.34 and the 200-day SMA at $29.43. My annual value levels are $34.17 and $32.82 with a monthly pivot at $35.06 with no risky level versus the September 2008 high at $44.67.
FDIC data shows that WFC increased its total assets by 9.0% to $1.33 trillion in Q4, sequentially moving up to being the third largest of the big four banks. WFC has an asset to risk based capital ratio of 10.15% unchanged from 10.18% in Q3. WFC is another "too big to fail" bank that's even bigger.
Wells Fargo has the largest exposure to construction & development loans (C&D) at $17.28 billion. While this is nowhere near an overexposure versus risk based capital, it represents 8.5% of the total C&D loans in the banking system.At the time of publication the author had no position in any of the stocks mentioned. Follow @suttmeier This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV