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href=”http://seekingalpha.com/article/130235-wells-fargo-s-record-quarter-really”>Greg Feirman is skeptical
Wells Fargo (WFC) this morning pre-announced a record 1st quarter saying it expects 55 cents in net income – compared to 23 cents expected by analysts. Net interest margins at 4.1%, Wachovia acquisition going great, etc…
Really?
Wells Fargo stock is up 22+%. JP Morgan (JPM) is up 13+%, Bank of America (BAC) 19%, Citi (C) 9%.
Let’s not forget that these donkeys raised their dividend by 10% to 34 cents back on July 16, 2008 resulting in a 33% one day blowout in their stock and other financials. Less than 8 months later (March 6, 2009), they lowered their dividend to 5 cents a share.
This has the feel of a capitulation panic buying session. Could this be the end of the bear market rally?
Ockham Research is somewhat neutral
Wells Fargo, which is up more than 25% in morning trading, is spurring a rally in the financial sector and the market as a whole. Clearly, these results are much better than anyone expected, and the mortgage business is again looking like a strength rather than a weakness. After the recent run in bank stocks, with many including WFC doubling, we are holding a valuation stance of Fairly Valued. However, if fundamentals continue to improve for WFC and the rest of the banks they are due for an upgrade. The one downside for Wells is the large amount of exposure to commercial real estate, but if you believe that the fear speculation surrounding commercial real estate impending trouble is over blown or already priced in, then Wells Fargo is certainly intriguing.
