Goldman Sachs Downgrades Wells Fargo (WFC) To Neutral

Goldman Sachs Group analysts Richard Ramsden, Brian Foran, Daniel Harris and Jessica Binder Graham downgraded shares of Wells Fargo & Company (NYSE: WFC) to Neutral.

The analysts said that there was a lot of earnings power that could push Wells Fargo & Company shares higher in the near term but that peers such as Bank of America Corporation (NYSE: BAC), JP Morgan Chase & Co (NYSE: JPM) and Citigroup Inc (NYSE: C) were better values, relatively speaking.

The analysts also said that the over-earning of the Wells Fargo & Company mortgage servicing business was a near-term risk.

The Goldman Sachs Group analysts wrote, "that said, ultimately we think that Wells offers longer-term value with $4.35 of normalized earnings power without regulation, and $4.15 adjusted for regulatory risks (see Exhibit 8). Thus, the stock is valued at 7X normalized earnings, which is attractive but moderately less so than the stock of Bank of America, JPMorgan Chase and Citigroup."