Wells Fargo Q2 profit down 48%: Pro explains why stock is ‘very attractive’

Shares of Wells Fargo & Co (NYSE: WFC) are up 8.0% on Friday even after the financial services company reported a 48% hit to its Q2 profit and revenue that came in shy of Wall Street estimates.

Wells Fargo Q2 earnings snapshot

Net income printed at $3.12 billion versus the year-ago figure of $6.04 billionPer-share earnings of 74 cents were down significantly from $1.38 last yearOn an adjusted basis, EPS stood at 82 cents in the recent financial quarterRevenue tanked 16% YoY to $17.02 billion as per the earnings press releaseFactSet consensus was for 80 cents of adjusted EPS on $17.48 billion in revenueNet interest income jumped 16% on a 37 bps increase in net interest margin

According to Wells Fargo, the hit to revenue was primarily related to divestitures and a slowdown in mortgage banking. The stock is down more than 35% for the year.

Stephanie Link reacts to Wells Fargo Q2 results

Reacting to the earnings report on CNBC’s “Squawk Box”, Hightower’s Stephanie Link said the banks are in a much better position than they were in the Great Financial Crisis.

WFC is getting hit not only from markets but also mortgages. But they did a good job in expenses down 3.0%, loans up 8.0%. It’s a restructuring story. They’re focusing on cost cuts. Asset cap is an overhang, as soon as that’s lifted, it’ll be a nice catalyst.

Wells Fargo is trading at 0.9 times book, which, as per Link, is very attractive to own. Wall Street currently rates the stock at “overweight” with upside to $52.62 that translates to an over 25% increase in the stock price from here.

The post Wells Fargo Q2 profit down 48%: Pro explains why stock is ‘very attractive’ appeared first on Invezz.

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