The third-quarter earnings season is kicking off, and major investment banks are among the key names investors will be watching this month. Wells Fargo (WFC) is one of them, with the bank set to release its Q3 fiscal 2026 results before the market opens on Oct. 13. The setup, however, is far from ideal for bank stocks. Rising Treasury yields have recently weighed on financial companies, despite the fact that higher interest rates are generally viewed as positive for banks.
The problem is that a sharp rise in yields can hurt banks in several ways, from creating paper losses on available-for-sale bond portfolios to squeezing net interest margins as deposits climb. Higher yields can also weigh on credit demand and overall credit quality. Wells Fargo shares have already felt the pressure from this challenging backdrop. WFC stock has recently faced another headwind as the bank comes under a new federal investigation into its lending practices, adding to investor concerns and further denting its near-term performance.
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With Wells Fargo’s next earnings report just around the corner, investors have a timely opportunity to take a closer look at WFC stock and assess whether the recent pressure has created an attractive setup or signals more challenges ahead.
About Wells Fargo Stock
Founded in 1852 and headquartered in San Francisco, California, Wells Fargo has grown into one of the largest financial services companies in the United States with more than $2 trillion in assets. The company serves millions of customers with a broad portfolio of banking, investment, mortgage, consumer finance, and commercial finance products and services.
Wells Fargo operates through four key segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management. Its scale and diversified operations have cemented its position among the largest U.S. corporations. However, Wells Fargo investors have had little to cheer about lately. With a market capitalization of roughly $252 billion, WFC stock has been under pressure on Wall Street, with fresh regulatory scrutiny adding to the bank’s recent woes.
The latest blow came on Oct. 7, when shares fell 1.5% after The Wall Street Journal reported that Wells Fargo is facing a federal investigation into programs designed to boost Black homeownership. According to the report, the U.S. Department of Housing and Urban Development (HUD) recently sent a letter saying that it would investigate whether the bank violated fair lending laws by “sorting” homeowners based on race. HUD Secretary Scott Turner said the agency also plans to review initiatives at other banks. The regulatory overhang comes as WFC stock has already tumbled nearly 7% over the past month.
The weakness isn’t limited to the recent selloff. Over the past year, Wells Fargo shares have climbed 5% but are down 10% so far in 2026. That performance falls well short of the broader S&P 500 Index ($SPX), which has gained 16% over the past year and 14% year-to-date (YTD). WFC stock is also trailing its financial sector peers. The State Street Financial Select Sector SPDR ETF (XLF), which provides exposure to major U.S. financial companies, is down marginally YTD and up almost 3% over the past 52 weeks.
www.barchart.com Inside Wells Fargo’s Financial Health
Wells Fargo delivered a strong Q2 performance on July 14, comfortably beating Wall Street’s expectations across key metrics. The banking giant reported net income of $6.4 billion, translating to diluted EPS of $2, up from $1.60 in the year-ago quarter. On an adjusted basis, EPS came in at $1.96, well above the consensus estimate of $1.73 per share.
The top line was equally impressive, with total revenue rising 9% year-over-year (YOY) to $22.6 billion, surpassing the consensus estimate of $21.8 billion. The increase was fueled by a 5% rise in net interest income (NII) to $12.3 billion and a stronger 13% YOY jump in noninterest income to $10.3 billion.
Corporate and Investment Banking (CIB) was one of the quarter’s standout performers, with segment revenue surging roughly 16% YOY. The division benefited from a broad revival in capital markets activity, higher corporate loan balances, and a sharp rebound in investment banking fees. Wealth and Investment Management (WIM) revenue also climbed 13% YOY, while Consumer Banking and Lending (CBL) revenue increased 6%.
WIM saw client assets jump 15% YOY to more than $2.6 trillion. Wells Fargo’s credit metrics also moved in the right direction, pointing to a stable underlying consumer and commercial credit environment. The provision for credit losses fell 9% YOY to $914 million, while both net loan charge-offs and nonperforming assets declined on a sequential and annual basis.
At the same time, average loans grew to $1.03 trillion, while average deposits increased to $1.47 trillion, signaling healthy balance-sheet growth and strong core customer retention. Looking ahead, Wells Fargo left its fiscal 2026 guidance unchanged, calling for NII of around $50 billion, including $48 billion excluding Markets and $2 billion from Markets. The bank also maintained its outlook for 2026 noninterest expense at approximately $55.7 billion.
How Do Analysts View Wells Fargo Stock?
As Wells Fargo gets ready to unveil its Q3 results, Wall Street is signaling plenty of confidence. WFC stock currently holds a consensus “Moderate Buy” rating based on 27 analysts with coverage. Of those analysts, 17 have a “Strong Buy" rating, three have a “Moderate Buy,” and seven have a “Hold” rating.
The bullish outlook is reflected in analysts’ price targets. The average target of $99.67 points to roughly 19% potential upside from current levels, while the Street-high target of $115 suggests WFC stock could rally as much as 38% from here.
www.barchart.com On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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