UBS: 'Headwinds could persist' for Wells Fargo after the fake account scandal killed its stock last year
So far, the bank has agreed to pay a $190 million settlement, return $2.8 million to at least 1.4 million additional customers, and lost its CEO.
Despite the cooperation with regulators and reparations payments, Swiss bank UBS says its analysis "suggests revenue headwinds could persist," and has lowered its price target by $3 to $56.
"The data does not yet suggest a recovery in customer engagement," analysts Saul Martinez and David Eads said in a note Friday. "We do not think that cost reduction and capital management benefit EPS momentum in '19. Nonetheless, tangible evidence than an earnings recovery is forthcoming is needed for the current valuation discount to narrow."
Beyond the scandals that have plagued the California-based bank for over a year now, its digital game is struggling too, failing to keep up with competitors like Chase and Bank of America.
"Wells' app download share has not shown signs of recovery vs Chase and Bank of America after declining meaningfully in 2H16 (though recent news flow has seemingly not had a negative impact either)," the bank said. "Somewhat more encouragingly, employee satisfaction scores have recovered since early '17 and now stand moderately above the peer group average."
Wells Fargo's stock took a substantial hit when the fake accounts were first made public, hitting a 52-week low of $43.55 last year.
"Fallout from the sales fraud/other missteps created above average uncertainty about the financial outlook," UBS said.
Shares of Wells Fargo rose 0.72% in trading Friday, closing at $51.66 - 8.4% below UBS' target.
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- Catan adds climate change to the latest edition of the world-famous board game
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- JNK India IPO allotment – How to check allotment, GMP, listing date and more
- Indian Army unveils selfie point at Hombotingla Pass ahead of 25th anniversary of Kargil Vijay Diwas