Investors should consider hunkering down in Wells Fargo in what could be a rough period for bank stocks, according to Citi. Keith Horowitz upgraded Wells Fargo to buy from neutral, saying in a note to clients on Monday that the bank was well positioned for a rocky macroeconomic environment. "As we refreshed our models, one balance sheet that clearly stood out to us was WFC in terms of capital flexibility and asset sensitivity," Horowitz wrote. Big bank stocks have struggled in 2022, but Wells Fargo has outperformed some of its peers with a slight gain of 1.6%. The company's fundamental outlook suggests it should continue to outperform, according to Citi. "WFC struck us as among best positioned for higher rates and we see 8% EPS upside in 2023 with limited credit risk. Planned cost saves and removal of asset cap are an added benefit," Horowitz wrote. While higher rates are usually seen as a positive for banks broadly, the rapid surge in Treasury yields has led to growing concerns about an economic slowdown. Even with the upgrade, Citi lowered its price target on Wells Fargo by $2 to $56 per share. The new target is nearly 15% above where the stock closed on Friday. — CNBC's Michael Bloom contributed to this report.
