It’s been a difficult year for shareholders of Wells Fargo (NYSE: WFC) and one agency says it’s likely get much worse.
Berenberg lowered its rating for the bank's shares to sell from hold, saying the bank will report earnings below consensus expectations next year. In a note to investors on Thursday, the firm said Wells Fargo has lost the magic it once had generating higher returns than peers, and so will revert to long-term industry averages.
One analyst with Berenberg reduced his price target to $35.00 from $45.00 for Wells Fargo shares, which would be a 36% decline from Thursday's close. His new price forecast is the lowest on Wall Street.
Wells Fargo has the biggest share of the U.S. commercial real estate lending and auto loans businesses.
The Berenberg analyst also predicts Wells Fargo will generate 2018 earnings per share of $3.81 versus the Wall Street consensus of $4.46.
Wells Fargo reported second-quarter net income of $5.8 billion, or $1.07 per diluted common share, compared with $5.6 billion, or $1.01 per share, for second quarter 2016.
Statisticians have found that only 19% of Wall Street analysts have sell or underweight ratings on Wells Fargo.
Wells Fargo has underperformed the market this year. Its shares are down 0.5% year to date compared with the S&P’s 10.5% gain through Thursday.
Wells Fargo shares began Friday trading down 50 cents to $54.38, within a 52-week range of $43.55 to $59.99
