Wells Fargo's (WFC) efforts to improve profitability and satisfy regulatory issues make it an attractive buying opportunity, ahead of an expected lifting of a regulatory order that caps its asset growth, RBC Capital Markets said Thursday.

The brokerage upgraded the bank to outperform from sector perform and reiterated an $80 price target. Wells Fargo's shares have tumbled nearly 13% in the past month.

The selloff reflects a good entry point, supported by progress on regulatory issues and strong capital levels, RBC co-Head of Global Financials Research Gerard Cassidy wrote.

Once the asset cap imposed by the Federal Reserve in 2018 is lifted, Wells Fargo will likely "execute on its growth plan to achieve its profitability target," Cassidy said. At the time, the Fed ordered the bank to improve its governance and risk management processes.

Reuters reported in November that Wells Fargo was close to getting its asset cap lifted in 2025.

"Strategies that improve profitability, like shrinking a bank's balance sheet or leaning into balance sheet 'light' businesses, could prove more rewarding to shareholders than strategies that focus on growth, depending on the part of the economic cycle," Cassidy said.

Wells Fargo has had to employ some of those strategies to boost profitability amid asset cap restrictions, and will be well-positioned once the cap is lifted, he said.

Other factors that drove the rating upgrade at RBC include Wells Fargo's strong business mix and credit metrics.

RBC maintained its 2025 and 2026 earnings per share estimates of $5.85 and $6.75, respectively.