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'Worst is over' for Wells Fargo stock, analyst says

•Most of the bad news about the firm's accounting scandal is reflected in shares, Scott Siefers said.
•He thinks there may be a risk of revenue momentum stepping back.
•Siefers has a hold rating on the stock

The "worst is over" for Wells Fargo shares, with most of the bad news about the firm's accounting scandal reflected in the stock at this point, bank analyst Scott Siefers told CNBC on Monday.

Wells Fargo announced Monday it was taking back $75 million from former CEO John Stumpf and ex-community bank unit head Carrie Tolstedt because of the bank's cross-selling practices that resulted in 2 million fake accounts being created.

"It does trade at a discount. So over time maybe it will grab back a little bit of its relative valuation but at this point investors have appropriately discounted all this sales scandal into the stock price," said Siefers, a principal at Sandler O'Neill.

The clawbacks came after a six-month investigation by Wells Fargo's independent directors.

The board review indicated that Stumpf acknowledged that he made significant mistakes and helped create a culture at the bank that resulted in abuses, including the creation of fake consumer accounts.

Siefers told "Power Lunch" the risk at this point is that Wells Fargo may overcorrect to the downside. In other words, by stepping back from from cross-selling and aggressive sales goals, Wells Fargo may see revenue momentum step back as well, he explained.

He predicts the bank will ultimately trade at a premium to universal banks but perhaps at a bit of a discount or in-line with regional banks.

Siefers currently has a hold rating on the stock.

— CNBC's Wilfred Frost contributed to this report.

Disclosure: Wells Fargo is an investment banking client of Sandler O'Neill. Sandler O'Neill has received compensation from Wells Fargo for providing products or services other than investment banking services in the 12-month period ending as of the last calendar quarter.
CNBC's Wilfred Frost contributed to this report.

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