(Bloomberg) -- Wells Fargo piled onto an increasingly gloomy outlook for banks on Friday, cutting its price targets and earnings estimates for more than a dozen stocks.
The firm reduced its annual estimates by about 6% for 2020-2021, and also trimmed expectations for the second half of 2019. Wells Fargo now expects about 30 basis points of net interest margin compression between 2018 and 2021, versus prior expectations that bank industry NIM would increase about 10 basis points over that period. Despite talk of hedging on recent earnings calls, Wells Fargo said disclosures suggest more downside at current interest rate levels.
“There is no way to sugar coat the negative impact of lower interest rates on NIM, NII, and EPS, leading to likely cautious mgmt. guidance in Sept.,” analysts led by Mike Mayo wrote in a research note.
Citigroup is the analysts' favorite pick, while regional banks like Comerica Inc., Zions Bancorp, Regions Financial Corp. and M&T Bank Corp. continue to look very sensitive to rates.
Read more: Citigroup Leads Banks Lower as Key Part of Yield Curve Inverts
To contact the reporter on this story: Catherine Larkin in Chicago at clarkin4@bloomberg.net
To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Steven Fromm
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