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WFC

Wells Fargo

$44.65

-0.67 (-1.48%)

, GE

General Electric

$28.82

-0.08 (-0.28%)

15:45
10/13/16
10/13
15:45
10/13/16
15:45

On The Fly: What to watch in Wells Fargo earnings report

Wells Fargo (WFC) is scheduled to report results of its third fiscal quarter before the market open on October 14, with a conference call scheduled for 10 am EDT. What to watch for: 1. SALES TACTICS SCANDAL: Since last month, Wells Fargo has been making headlines over its sales tactics, after the Consumer Financial Protection Bureau released its consent order against the bank, in which the agency stated: "Thousands of employees engaged in improper sales practices to satisfy sales goals and earn financial rewards under its incentive compensation program." Following the news, Wells Fargo CEO John Stumpf testified about the bank's scandal before a U.S. Senate committee, apologizing profusely for the opening of fake accounts. Later in the month, it was announced that Stumpf will forfeit much of his 2016 salary, including his bonus and $41M in unvested equity, as the company's independent directors launch an investigation into its retail banking practices. Earlier this week, the bank's CFO John Shrewsberry said efforts by states to penalize its business over an unauthorized-accounts scandal will not affect the third quarter "much," according to The Wall Street Journal. On Wednesday, the bank announced that Stumpf is retiring from both the company and the board. The board has elected Tim Sloan, the company's president and COO, to succeed Stumpf as CEO and Stephen Sanger, its lead director, to serve as the board's non-executive chairman. 2. EXPECTATIONS FOR THE QUARTER: During the company's last earnings call on July 15, Shrewsberry said that the remainder of the company's $2B GE Capital (GE) purchase will close this year, and said mortgage origination will be somewhat higher in the third quarter. Additionally, the company said it expects to be at the higher end of its efficiency range of 55%-59%. 3. UNDERLYING EARNINGS POWER: Late July, Barron's noted that Wells Fargo consistently meets or exceeds earnings expectations, but it appears to rely on one-time gains to boost results. The publication explained that Barclays analyst Jason Goldberg has found that noncore factors comprised an average of 19% of the bank's earnings in the past 11 quarters. The special factors include sales of debt and equity securities. Bottom line, said Barron's, favorable asset sales may not be sustainable or indicative of the underlying business, and Wells Fargo's reported results "appear to overstate underlying earnings power from its core banking and wealth-management businesses." 4. ANALYSTS DIVERGE: On Monday, UBS analyst Brennan Hawken upgraded Wells Fargo to Neutral, saying the risk/reward appears more balanced after the significant underperformance of the shares. The analyst said he believes the company's earnings outlook remains uncertain, however. This was the third upgrade in about a month, after Baird analyst David George upgraded the stock to Outperform as he saw the pullback in the shares as a buying opportunity and noted that the issues facing the company were not balance sheet related. Additionally, Morgan Stanley analyst Betsy Graseck upgraded the stock to Overweight on valuation. On September 21, however, JPMorgan analyst Vivek Juneja downgraded Wells Fargo to Neutral, saying the "tough" Senate hearings and "mounting public scrutiny" will likely result in additional investigations that could pressure expenses. Voicing a similar opinion, Raymond James analyst David Long downgraded the stock to Underperform last week.

WFC

Wells Fargo

$44.65

-0.67 (-1.48%)

GE

General Electric

$28.82

-0.08 (-0.28%)

  • 14

    Oct

  • 23

    Oct

  • 14

    Nov

  • 17

    Nov

WFC Wells Fargo
$44.65

-0.67 (-1.48%)

10/13/16
BOFA
10/13/16
NO CHANGE
Target $48
BOFA
Buy
'Healing process' may now start for Wells shares, BofA/Merrill says
BofA/Merrill analyst Erika Najarian believes the departure of CEO, Chairman and President John Stumpf could begin a "healing process" for the shares of Wells Fargo. Consensus feedback from investors post the Congressional hearings is that Stumpf retiring may be a necessary step for the bank to begin putting the cross-sell controversy behind it, Najarian tells investors in a research note. The analyst expects the shares to react positively today on the news. She has a Buy rating on Wells Fargo with a $48 price target. The shares are down 9c to $45.23 in pre-market trading.
10/10/16
UBSW
10/10/16
UPGRADE
Target $44
UBSW
Neutral
Wells Fargo upgraded to Neutral from Sell at UBS
UBS analyst Brennan Hawken upgraded Wells Fargo to Neutral saying the risk/reward appears more balanced after the significant underperformance of the shares. The analyst believes Wells' earnings outlook remains uncertain, however. He keeps a $44 price target for the shares.
10/04/16
10/04/16
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Wells Fargo (WFC) downgraded to Underperform from Market Perform at Raymond James with analyst David Long saying the fallout from the unauthorized account openings will result in continued under performance. The analyst said several additional investigations, lawsuits, and fines have been announced, resulting in a still cloudy outlook. 2. Kinder Morgan (KMI) downgraded to Hold from Buy at Stifel analyst Selman Akyol citing valuation. 3. GrubHub (GRUB) downgraded to Hold from Buy at Stifel with analyst John Egbert citing valuation. 4. Dr Pepper Snapple (DPS) downgraded to Hold from Buy at Evercore ISI with analyst Robert Ottenstein saying reports that Bai Brands is looking for a new owner are credible and could change investor's psychology on the stock and its Allied Brands business. 5. Dollar Tree (DLTR) downgraded to Neutral from Buy at Cleveland Research with the firm saying sales trends appear to have slowed further at Family Dollar as the company struggles with increased price competition, difficult comps, and strategy headwinds. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
10/04/16
RAJA
10/04/16
DOWNGRADE
RAJA
Underperform
Wells Fargo downgraded to Underperform from Market Perform at Raymond James
Raymond James analyst David Long downgraded Wells Fargo to Underperform and reduced estimate saying the fallout from the unauthorized account openings will result in continued under performance. The analyst said several additional investigations, lawsuits, and fines have been announced, resulting in a still cloudy outlook.
GE General Electric
$28.82

-0.08 (-0.28%)

09/07/16
BERN
09/07/16
NO CHANGE
BERN
General Electric deal a long-term positive, says Bernstein
After GE acquired two European 3D printer companies, Bernstein analyst Steven Winoker says that the transaction will enable GE to more easily integrate 3D printing into its businesses. The analyst says that the productivity benefits that GE can realize from the deal are "self-evident," and he predicts that the deal will save GE money over the long-term. Winoker keeps a Market Perform rating on the stock.
07/22/16
07/22/16
INITIATION

On The Fly: Top analyst initiations
Catch up on today's top analyst initiations with this list compiled by The Fly: 1. General Electric (GE) initiated with a Sell at Standpoint Research. 2. Williams (WMB) and Williams Partners (WPZ) resumed with a Neutral at Citi. 3. Nevro (NVRO) initiated with an Overweight at Piper Jaffray. 4. Universal Electronics (UEIC) initiated with a Buy at Sidoti. This list is just a portion of The Fly's analyst coverage. To see The Fly's full Street Research coverage, click here.
07/22/16
STPT
07/22/16
INITIATION
Target $26
STPT
Sell
General Electric initiated with a Sell at Standpoint Research
Target $26.
06/29/16
JPMS
06/29/16
NO CHANGE
JPMS
Underweight
JPMorgan keeps Underweight on GE following SIFI news
JPMorgan analyst C. Stephen Tusa says that while the removal of the Systemically Important Financial Institution designation came sooner than expected, it does not change his fundamental view of General Electric shares. The company's earnings and free cash flow outlook remain unchanged, and its stock remains expensive at current levels, Tusa tells investors in a research note. He keeps an Underweight rating on shares of GE.

TODAY'S FREE FLY STORIES

KBR

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FNBC

First NBC Bank

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SGBK

Stonegate Bank

$45.90

-0.52 (-1.12%)

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Stonegate Bank reports Q1 non-GAAP EPS 56c, consensus 57c »

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PROV

Provident Financial

$19.23

-0.03 (-0.16%)

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YGE

Yingli Green Energy

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EPC

Edgewell Personal Care

$71.49

-0.14 (-0.20%)

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  • 02

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ORC

Orchid Island Capital

$10.60

-0.33 (-3.02%)

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Breaking Syndicate news story on Orchid Island Capital »

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AEP

American Electric

$67.83

-0.27 (-0.40%)

17:35
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ORC

Orchid Island Capital

$10.60

-0.33 (-3.02%)

17:34
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Syndicate
Breaking Syndicate news story on Orchid Island Capital »

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  • 28

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HBHC

Hancock Holding

$46.70

-0.5 (-1.06%)

, FNBC

First NBC Bank

$2.65

-0.2 (-7.02%)

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Whitney to acquire branches, assets, liabilities of First NBC from FDIC »

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HBHC

Hancock Holding

$46.70

-0.5 (-1.06%)

FNBC

First NBC Bank

$2.65

-0.2 (-7.02%)

03/08/13
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  • 06

    Jun

TSLA

Tesla

$314.07

5.44 (1.76%)

17:31
04/28/17
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Periodicals
Tesla aims to hire engineers from Mexico to work at CA plant, Reuters says »

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  • 03

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LMT

Lockheed Martin

$269.45

-1.69 (-0.62%)

17:22
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Lockheed Martin awarded $332.1M government contract »

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  • 31

    May

BA

Boeing

$184.83

1.61 (0.88%)

17:21
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Boeing awarded $541M government contract modification »

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  • 31

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WBA

Walgreens Boots Alliance

$86.54

0.65 (0.76%)

, RAD

Rite Aid

$4.00

0.05 (1.27%)

17:20
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Walgreens to push regulators over decision on Rite Aid deal, NY Post says »

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GE

General Electric

$28.99

-0.09 (-0.31%)

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SIX

Six Flags

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LMT

Lockheed Martin

$269.45

-1.69 (-0.62%)

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  • 31

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SBBP

Strongbridge Biopharma

$4.50

0.05 (1.12%)

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  • 11

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CYH

Community Health

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MRUS

Merus

$22.20

-0.14 (-0.63%)

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AEZS

Aeterna Zentaris

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  • 09

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ANY

Sphere 3D

$0.19

-0.006 (-3.13%)

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  • 11

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MRUS

Merus

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