Morgan Stanley Upgrades Wells Fargo Stock, Projecting Strong Earnings Growth

2026-10-05 companies

New York, Tuesday, 6 October 2026.
Morgan Stanley upgraded Wells Fargo to an Overweight rating with a $102 price target, citing easing margin pressures and an estimated 27% upside following a prolonged period of underperformance.

Morgan Stanley Revision

On October 5, 2026, Morgan Stanley issued a bullish research note on Wells Fargo & Co. (NYSE: WFC), upgrading the stock from Equal-Weight to Overweight [1][2]. The analyst team, led by Manan Gosalia, highlighted that the major U.S. lender is primed for significant outperformance after lagging its Wall Street rivals [1][5]. This strategic shift signals a compelling entry point for institutional investors, driven by improving operational metrics and valuation stability [1]. The upgrade reflects a consensus that the bank’s period of underperformance relative to the broader financial sector may be concluding [6].

Morgan Stanley Revision

Analysts set a price target of $102 for the bank, signaling substantial potential gains from recent trading levels [1][2]. With Wells Fargo closing at $80.45 on the preceding Friday, the new target implies an estimated upside of 26.787 percent [2]. This valuation adjustment underscores the firm’s confidence in the bank’s ability to recover ground lost during the previous fiscal quarters [5]. The move represents a significant vote of confidence in the lender’s strategic direction heading into the final quarter of 2026.

Market Context and Peers

Despite the optimistic outlook, Wells Fargo has faced challenges, with stock performance down approximately 14% year-to-date according to Morgan Stanley’s assessment [3]. Other data providers note a 12.26% decline over the same period, indicating the bank has underperformed the 7% median gain seen across bank coverage [3]. This lag behind rival banks has been a key factor weighing on investor sentiment throughout the year [1][6]. The financial institution has maintained dividends for 56 consecutive years, providing a layer of stability amidst the share price volatility [3].

Market Context and Peers

In contrast to Morgan Stanley’s upgrade, Goldman Sachs maintained a Buy rating on October 2, 2026, but reduced its price target from $107.00 to $96.00 [4]. This adjustment represents a -10.28 percent decrease in projected valuation, suggesting some analysts are factoring in potential near-term headwinds [4]. Wells Fargo holds a market capitalization of approximately $247.42 billion and around $2.1 trillion in assets, indicating its significant scale in the financial sector [4]. Institutional holdings data shows 28 gurus currently hold WFC stock, with mixed activity in recent quarters [4].

Strategic Outlook

Looking forward, Morgan Stanley projects a 17% return on tangible common equity (ROTCE) by the second half of 2027, rising to 18% by 2028 [3]. Net interest margins are modeled at 2.42% through the first quarter of 2027, with expectations of rising to 2.49% by the fourth quarter of 2027 [3]. Wells Fargo also raised its 2026 loan growth outlook, citing strong U.S. consumer spending and positive credit trends [3]. These projections suggest a stabilization of profitability metrics that had previously concerned market observers.

Strategic Outlook

Market sentiment remains cautious but attentive, with high-profile investors like Jim Cramer acknowledging the stock has been a disappointment recently [7]. Cramer noted on October 5 that the Morgan Stanley call signals the drought may be over, giving the investment thesis a fresh catalyst [7]. The Federal Reserve’s asset cap has historically limited the bank’s ability to grow its balance sheet compared to peers, making analyst signals particularly meaningful [7]. Investors will be watching to see if this upgrade draws broader institutional buying to sustain the momentum [7].

Sources

Morgan Stanley Wells Fargo