Wells Fargo Shares Fall Despite Q2 Earnings Beat: 'Guidance Was Softer Than Expected — A Valid Concern'

Core Viewpoint - Wells Fargo's second-quarter earnings report showed mixed results, with earnings per share beating consensus but a decline in net interest income, leading to varied analyst reactions and price target adjustments [1][2][3]. Analyst Ratings and Reactions - Goldman Sachs maintained a Buy rating but reduced the price target from $71 to $64, noting a deterioration in revenue mix and unexpected headwinds to net interest income (NII) [1][2]. - RBC Capital Markets reiterated a Sector Perform rating with a price target of $61, highlighting a decline in NII from $12.2 billion in the previous quarter to $11.9 billion, and lowered earnings estimates for 2024 and 2025 [1][3]. - Piper Sandler maintained a Neutral rating with a price target of $61, suggesting that the market's reaction to the stock's decline was overdone, although acknowledging concerns over softer NII guidance [1][3]. - Oppenheimer maintained a Perform rating, noting that actual NII matched estimates and that the refined guidance for NII still fell within earlier projections [1][4]. Financial Performance Highlights - Wells Fargo reported second-quarter earnings of $1.33 per share, exceeding the consensus estimate of $1.25 per share, while core earnings were in line with expectations at $1.42 per share [2]. - The company's NII for the quarter was $12.0 billion, a decline from $13.2 billion year-over-year, and guidance for 2024 indicated a $350 million headwind to NII due to wealth management deposit repricing [2][3]. - Analysts noted that the overall performance was impacted by higher fee revenues but offset by increased expenses and a larger-than-expected provision [3].