Oct 5 Goldman Sachs Group Inc on
Wednesday became the ninth investment bank in the past month
whose analysts have cut forecasts for Wells Fargo & Co,
citing regulatory and legal issues in the wake of its scandal
over fake accounts.
Wells Fargo is scheduled to report third-quarter results on
Oct. 14. Analysts are expecting a profit of $1.01 per share, on
average, down 0.8 percent from the estimates of 30 days ago.
Several Wall Street analysts have lowered profit estimates
for Wells in recent weeks, citing problems the bank is facing
over unauthorized accounts.
On Sept. 8, the San Francisco-based bank reached a $190
million settlement with the U.S. Consumer Financial Protection
Bureau, the Office of the Comptroller of the Currency and a Los
Angeles prosecutor over accusations that it opened up to 2
million accounts in customers' names without their permission.
Other regulators and authorities, including the U.S. Justice
and Labor Departments, have since opened probes, and the bank is
facing lawsuits from former employees, customers and
shareholders over the matter as well.
Chicago's City Council on Wednesday approved a one-year ban
on conducting city business with Wells Fargo. Last
week, California State Treasurer John Chiang announced a
sweeping suspension of the state's business relationships with
Wells Fargo for the next 12 months.
All analysts who have revised third-quarter projections
since the settlement have reduced them, according to Thomson
Reuters data. A dozen have cut full-year 2017 projections.
By contrast, just three of 12 analysts who have revised 2017
projections for JPMorgan Chase & Co have taken them
Among analysts who downgraded their recommendation on Wells
Fargo were JPMorgan analyst Vivek Juneja and Richard Bove of
Rafferty Capital Markets.
"Even though the fines are not meaningful the damage to the
Wells business model is significant," Bove wrote in the Sept. 9
note accompanying his downgrade.
A Wells Fargo spokesman declined to comment on the analyst
While Morgan Stanley analyst Betsy Graseck reduced her
estimates, she raised her recommendation on Wells Fargo shares
to overweight from equal-weight in a Sept. 20 report.
"Yes, we could see more volatility ahead as headline risk
persists, but Wells is rarely this inexpensive," she wrote.
(Reporting by Dan Freed in New York; Editing by Lauren Tara
LaCapra and Matthew Lewis)