Cramer Calls Wells Fargo Valuation a ‘Mistake’ Amid Turnaround Progress
Wells Fargo reported second-quarter earnings of $2.00 per share on July 14, beating estimates, while Baird raises its price target to $92.
CNBC host Jim Cramer has labelled the market’s current sentiment toward Wells Fargo & Company as a mistake, arguing that the bank’s valuation multiple remains too low despite significant operational progress. Speaking on Squawk on the Street, Cramer characterised the lender as a long-term turnaround story orchestrated by chief executive Charlie Scharf, suggesting that investors are overlooking the bank’s momentum in investment banking and mergers and acquisitions.
The comments followed Wells Fargo’s second-quarter earnings report on July 14, which showed revenue of $22.62 billion and earnings per share of $2.00, surpassing analyst estimates of $1.72. Cramer noted that the bank’s forward price-to-earnings multiple of 12.09 is unjustified, particularly when compared to the Money Center Banks' average multiple of 13.04. He suggested that Scharf is dissatisfied with the valuation and is willing to buy back stock to increase the share price.
Wells Fargo has been undergoing a major restructuring, emerging from the elimination of an asset cap enforced by the Federal Reserve and working to repair trust issues. The bank is also exiting non-core businesses, having previously sold its rail equipment lease business, mortgage servicing unit, auto finance division, and private equity investments. Cramer described the current situation as a long-term turnaround that should take time to properly execute, noting that the bank is not primarily an earnings story but rather a strategic reset.
Financial firm Baird maintained a Neutral rating on Wells Fargo shares but raised its price target to $92 from $85, stating that recent share price movement made the stock more fairly valued. This coverage came after Baird had warned in January that the removal of the asset cap had injected enthusiasm into the bank's shares. The firm’s adjustment reflects a cautious but improving outlook on the lender’s prospects.
Hedge fund interest in Wells Fargo has increased, with 82 out of 1,022 tracked funds holding a stake in the bank as of Q1 2026, up from 72 out of 1,041 in Q4 2025. Millennium Management was the only notable hedge fund among those tracked to boost its holdings, growing them by 17%. Other notable holders include Harris Associates and Pzena Investment Management, although JPMorgan Chase & Co. and Capital One Financial Corporation remain more popular among hedge funds.
