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Pro Analysis

Analyst: Wells Fargo is rarely this inexpensive

A bicyclist rides by a Wells Fargo bank branch in San Francisco, California.
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A bicyclist rides by a Wells Fargo bank branch in San Francisco, California.

Morgan Stanley upgraded shares of Wells Fargo to overweight from equal weight on Tuesday, citing attractive valuations, a "best-in-class" dividend and the potential for the financial institution to navigate through its legal woes over the opening of sham accounts.

"Yes, we could see more volatility ahead as headline risk persists, but Wells is rarely this inexpensive. This is an opportunity," wrote equity analyst Betsy Graseck in a research note.

Graseck explains that Wells Fargo is trading at 11 times earnings and pays a 3.5 percent dividend yield, which she calls "one of the best values in both the group and the S&P 1500."