Wells Fargo shares fall alongside broader market

Shares dipped 88 cents, or 3 percent, to $28.62. Shares have traded between $20.46 and $44.69 in the past 12 months.

The broader market declined on Monday as more bleak news from corporate America fanned investors concerns about the health of the economy.

Struggling insurer American International Group Inc. got a record investment from the federal government, as it reported a more than $24 billion third-quarter loss. And electronics retailer Circuit City Stores Inc. filed for bankruptcy protection.

In a note to clients on Monday, Credit Suisse analyst Todd Hagerman upgraded Wells Fargo shares to "Outperform" from "Neutral," noting that the bank has "substantially improved" its balance sheet and potential earnings power following an $11 billion common equity raise.

Additionally, the pending acquisition of Wachovia Corp. provides the San Francisco-based bank with potential earnings leverage. Hagerman said the bank is now well positioned to produce better-than-expected earnings in 2009 and 2010.

Still, to reflect the near-term dilution of the capital raise, Hagerman trimmed his 2008 earnings-per-share estimate to $1.98 from $2.20, and his 2009 estimate to $1.75 from $2.25.

Sandler O'Neill & Partners analyst R. Scott Siefers also trimmed his 2009 profit estimate on Wells Fargo, by 4 cents to $2.01 per share. Analysts polled by Thomson Reuters, on average, anticipate earnings of $2.06 per share in 2008 and 2009.

Late Thursday, Wells Fargo priced an $11 billion stock offering in an effort to offset costs from acquiring Wachovia.

Wells Fargo priced the offering at $27 per share, a 6.2 percent discount to Thursday's closing price of $28.77.