Wells Fargo (WFC) - Get Report shares are a bit lower as Raymond James analysts sounded a bearish tone on the San Francisco banking company ahead of its earnings release, downgrading the stock to underperform from market perform.
Analyst David Long expects weak earnings and a fourth straight year of revenue declines. He sees revenue declining 6.8% in 2020, which he said would be the sharpest drop among Wells Fargo's big banking peers.
"Stigma around Wells' account scandal still lingers, as anecdotal evidence suggests the bank continues to lose customers and revenue-producing bankers, and struggles to recruit quality talent," he said.
"Additionally, we expect [net interest margin] pressure to remain intense as lower [shorter-term] rates pressure its asset yields, while deposit costs have little room to come down."
Long's bearish turn comes just months after he upgraded the stock to market perform, in March. But his expectations of loan growth of 0.5% and deteriorating profitability metrics prompted him to pull back.
Wells Fargo shares have had a strong run in 2019, climbing nearly 20% in 11 months. Since the stock hit a 2019 low of $43.48 in mid-October, it has risen more than 25%.
Wells Fargo shares at last check were down 0.9% to $53.97.