Wells Fargo & Co (NYSE:WFC) was featured as the call of the day Tuesday on CNBC's "Fast Money Halftime Report."
What Happened: Atlantic Equities analyst John Heagerty upgraded Wells Fargo from a Neutral to an Overweight rating and raised the price target from $50 to $60.
The analyst says the company should be able to build on its strong start to 2022, citing improving loan growth, high sensitivity to rising interest rates and strong cost control.
Link's Take: With the stock outperforming in 2021 and so far in 2022, Hightower Advisors' Stephanie Link thinks the analyst was late. However, she agrees with the call because she thinks there is still more upside ahead.
"Better late than never because it's still cheap," Link said Tuesday on CNBC, citing Wells Fargo's 1.3 times price-to-book valuation.
See Also: Wednesday Is Your Last Chance To Buy Wells Fargo Before The Dividend Payout
The stock increased by about 60% last year and is already up another 15%, which highlights the momentum in the name. "The restructuring is kind of just getting legs," she said.
Wells Fargo guided for declining expenses last quarter, which should improve the company's gross savings, Link noted.
Loan growth is definitely there, but "the real reason you own this is because it's the most sensitive to rates," she emphasized. Every 50 basis point increase in Fed funds adds about 16% to earnings for Wells Fargo, according to Link.
She also pointed out that the company raised its quarterly dividend last week.
WFC Price Action: Wells Fargo has traded as low as $29.68 and as high as $58.87 over a 52-week period,
The stock was up 3.34% at $55.60 Tuesday afternoon.
Photo: Shinya Suzuki from Flickr.
