All is not well at �Wells Fargo (WFC) following the bank’s disappointing third quarter earnings report.
The nation’s fourth-largest bank said it earned$4.06 billion, or 72 cents a share, up from 60 cents a share, in the year-ago period, but that result was penny shy of analysts’ expectations.�Revenue, which slipped 6.2% to $19.6 billion, also missed the $20.24 billion consensus.
Many investors had thought that the bank’s focus on traditional lending over investment banking would give it an edge in the quarter. However, while loans did increase and credit-loss provisions shrunk, it was not enough to overcome margin pressures and revenue declines that weighed on the results.
Miller Tabak + Co. analyst Thomas Mitchell maintained his Hold rating and $24.33 price target on the company following the report: “Credit trends were mixed: non-performing assets decreased (4%) from 2Q 2011, but both delinquencies and inflows of new NPAs increased, while the loss reserve/NPA ratio just held flat with 2Q, at 76%. This is a sharp slowdown in credit metrics improvement from both 2Q and 1Q 2011.”
However, Evercore Partners analyst Andrew Marquardt was more optimistic, reiterating his Outperform rating and $35 price target, as he sees the stock rebounding once investors look past near-term disappointments to “underlying healthy trends.”
Shares were recently trading down 5.9% to $25.10
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