Wells Fargo gives shareholders government cash: report
Investors gave Wells Fargo a pass and boosted the stock when it posted 2008 numbers yesterday, but analysts say the numbers are weak. FBR's Paul Miller says the giant, government-subsidized bank isn't making enough to keep paying its dividend.
Wells Fargo & Co. is dependent on $25 billion in federal TARP capital, yet it isn't earning enough to cover its dividend, and may still have to cut the payouts to investors, writes Friedman Billings Ramsey's Paul F. Miller, who expects the price to drop to $12 a share.
Sales and results are "weaker than expected," writes Sandler O'Neill + Partners' Scott Siefers, though he thinks today's price is about right. Results "missed consensus," and profit margins "face pressure," writes CreditSights chief David Hendler.
For once, the analysts are more skeptical than the investing public. Wells shares rose above $20 for the first time in two weeks yesterday after the giant bank reported 2008 profits, fourth-quarter losses, and no cut in its shareholder dividend.