Wells Fargo Shares Jump Nearly 10% in a Month: Should You Buy Now?

Wells Fargo (WFC) shares have gained nearly 10% in the past month, largely due to the Federal Reserve's removal of its $1.95 trillion asset cap in June 2025, which is expected to drive significant balance sheet growth, loan expansion, and fee-based revenue opportunities. The bank is also poised for Net Interest Income (NII) growth from anticipated Fed rate cuts and easing capital requirements, complemented by ongoing cost-cutting initiatives targeting $15 billion in gross expense savings. Supported by strong liquidity, WFC has increased its dividend by 12.5% and authorized a $40 billion share repurchase program, aiming for a 17-18% Return on Tangible Common Equity (ROTCE) and presenting an attractive valuation at 12.58x forward P/E against an industry average of 14.86x, with 2025 earnings projected to rise 16.8%.

Analysis

Wells Fargo (WFC) is positioned for significant growth following the Federal Reserve's removal of its $1.95 trillion asset cap in June 2025, a restriction in place since 2018. This pivotal development enables WFC to boost deposits, expand its loan portfolio, and broaden securities holdings, directly increasing Net Interest Income (NII). The bank has already demonstrated growth in fee-generating activities, with trading-related assets up 50% since late 2023 and investment banking fees rising 19% in the first nine months of 2025.

Further supporting NII expansion are anticipated Federal Reserve rate cuts, with two cuts already implemented this year to 3.75-4%, expected to stimulate lending activity. Management projects Q4 2025 NII to reach $12.4-$12.5 billion, up from $11.8 billion a year prior. Concurrently, WFC's aggressive cost-cutting initiatives, including a 4.3% year-over-year headcount reduction and a 2.1% decline in branches by Q3 2025, aim for $15 billion in gross expense savings by year-end, enhancing profitability.

The company's robust liquidity, evidenced by a 121% liquidity coverage ratio, underpins its strong capital deployment strategy. WFC increased its common stock dividend by 12.5% to 45 cents per share and authorized an additional $40 billion share repurchase program, with $34.7 billion remaining. With earnings projected to grow 16.8% in 2025 and 10.8% in 2026, and a forward P/E of 12.58X below the industry average of 14.86X, the stock presents an attractive valuation.

Key Decisions for Investors

• Investors should consider initiating or increasing long positions in WFC, given the removal of the asset cap, strong NII projections, and attractive valuation.
• Monitor the execution of cost-cutting initiatives and the impact of Fed rate cuts on lending activity to confirm sustained profitability and NII expansion.
• Evaluate WFC's capital deployment strategy, including dividend growth and share repurchases, as these are expected to boost shareholder returns and confidence.