Wells Fargo stock gets a downgrade. The analyst behind the call breaks it down

Raymond James' Downgrade of Wells Fargo - Raymond James downgrades Wells Fargo to market perform from strong buy due to limited near-term upside in share price [1] - The analyst call comes ahead of earnings reports from Wells Fargo, JP Morgan, and City [1] - Wells Fargo's fundamental outlook remains fantastic, with asset cap removed and earnings estimates/target price raised recently [3] - Wells Fargo's stock jumped 15% and hit the target price set three weeks prior [4] Bank Investment Cycle & Market Dynamics - Mega-cap banks (Wells Fargo, JP Morgan, City, BFA, Goldman Sachs, Morgan Stanley) all made 52-week highs recently [4] - Investors initially focus on the most liquid and visible mega-cap banks [5] - Investment is shifting towards regional banks, driven by valuation and expectations of US economic growth support [5][6] - Largest banks trade at the median valuation since the great financial crisis, while mid-cap banks are two PE multiples below and small-cap banks three PE multiples below their median levels [7] - Bank investors need clean credit, a normally sloped yield curve, and M&A activity to drive further investment [7] - M&A picking up could bring excitement and upside potential, with early green shoots appearing [7][8]