Wells Fargo shares have been on a roll in the fourth quarter of 2024 despite their December pullback. With a key catalyst on the horizon, the momentum looks like it can continue in the new year. Year-to-date performance: up 43.6% Forward price-to-earnings multiple: 12.7 versus a five-year average of 11.5 Our rating: Hold-equivalent 2 rating Our price target: $80 a share WFC YTD mountain Wells Fargo (WFC) year-to-date performance ’24 look back Wells Fargo’s run this year was driven by the Federal Reserve’s loosening monetary policy, which began in September. Lower interest rates mean better net interest income (NII) for Wells Fargo because customers will be less likely to move their money into higher-yielding accounts. Donald Trump’s presidential election victory in November propelled shares further on the odds of a more lenient regulatory environment for the financial sector. This includes fewer hurdles for mergers and acquisitions, a lower level of rainy-day capital that big banks must hold in reserves, and potentially even the removal of Wells Fargo’s $1.95 trillion asset cap . Throughout the year, shares were sensitive to news on Wells Fargo’s progress with its past regulatory misdeeds. The stock surged earlier this year after regulators lifted a key penalty tied to its 2016 fake accounts scandal. The day before that announcement, on Feb. 14, Wells Fargo stock closed at $48.53 a share. It hasn’t closed below $50 since. The stock hit an all-time intraday high of over $78 on Nov. 26. As of Monday’s late afternoon trading, shares have dropped 9.5% since then. ’25 look ahead Jim Cramer said 2025 could be “a much better year” for Wells Fargo, even after its 2024 performance exceeded expectations. Jim named the bank as a core holding . Lifting the asset cap was always a “when, not if” situation. But the Street believes it might happen quicker under Trump than it would have otherwise. Once that is gone, Wells Fargo will be able to grow its balance sheet past the nearly $2 trillion threshold, allowing it to hold more customer deposits and invest more in high-growth areas of the business like investment banking, which CEO Charlie Scharf has already been doing. All of the regulatory progress made under Scharf in his five years at the helm, coupled with the upcoming change in the White House, bodes well for the asset cap removal. “It will soon be seven years since [then-Fed Chair] Janet Yellen decided to slap sanctions on Wells Fargo. In that time, we have discovered that Charlie Scharf — who came from outside the organization [and] had nothing to do with what went wrong — has had to deal with multiple strictures and penalties from regulators, many of which he didn’t even know existed when he took the job,” Jim said during the Investing Club’s December Monthly Meeting . “The idea that this foolishness by the regulators can continue in 2025 is actually pretty unfathomable, and while Wells Fargo has been able to do a lot despite a cap on its activities, it would be inconceivable that [lifting the restriction] will not matter to the stock.” (Jim Cramer’s Charitable Trust is long WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A pedestrian walks by Wells Fargo headquarters at 420 Montgomery Street on December 04, 2024 in San Francisco, California.
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Wells Fargo shares have been on a roll in the fourth quarter of 2024 despite their December pullback. With a key catalyst on the horizon, the momentum looks like it can continue in the new year.
