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Sell Wells Fargo on earnings risk, Raymond James says

Wells Fargo ATM
Frederic J. Brown | AFP | Getty Images

Raymond James lowered its rating on Wells Fargo to underperform from market perform, predicting the bank's recent scandal will lead to lower future earnings.

The company agreed with regulators to pay a $185 million fine due to unauthorized customer account openings.

"Several additional investigations, lawsuits and fines have been announced, and some clients have pulled business from Wells, making the ultimate financial impact difficult to predict," analyst David Long wrote in a note to clients Tuesday.

"As a result, we may see several quarters of negative EPS revisions; furthermore, without a positive catalyst and WFC's historical premium P/E multiple at risk, we believe the shares are likely to underperform those of most other banks."