NEW YORK (TheStreet) -- Shares of Wells Fargo & Co. (WFC) are slightly down, lower by 0.13% to $54.96 in early market trading Monday, after the largest U.S. mortgage lender had its rating cut to "market perform" from "outperform" by analysts at Sanford Bernstein this morning.
Bernstein analysts maintained its price target of $56 on shares, and cited valuation for its downgrade.
Separately, San Francisco, CA-based Wells Fargo will go to trial on Monday as homeowners seek to recover $629 million for alleged overcharge fees by a company once owned by Wachovia, Reuters reports.
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Jury selection for the long-running class-action lawsuit concerning HomEq Servicing, a subprime mortgage services company, will begin in Manhattan federal court, Reuters added.
Separately, TheStreet Ratings team rates WELLS FARGO & CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate WELLS FARGO & CO (WFC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WFC's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- WELLS FARGO & CO's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WELLS FARGO & CO increased its bottom line by earning $3.89 versus $3.36 in the prior year. This year, the market expects an improvement in earnings ($4.10 versus $3.89).
- The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 93.74%. Regardless of WFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 25.76% trails the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Commercial Banks industry average. The net income increased by 2.7% when compared to the same quarter one year prior, going from $5,578.00 million to $5,729.00 million.
- You can view the full analysis from the report here: WFC Ratings Report