Wells Fargo expects a number of tailwinds to drive equities higher, especially lagging stocks with large short bets against them. The Wall Street bank believes a market “reflation” and short squeeze in certain stocks will be driven by more spending resulting from tax refunds (averaging $800 per person year over year), faster earnings growth in underperforming sectors and more liquidity injected into the market by the Fed. In a Tuesday note, Wells Fargo analysts led by Ohsung Kwon identified a basket of heavily-shorted and underperforming stocks in the Russell 3000 index that may be poised to rebound. The table below includes some of those stocks, which Wells Fargo also rates overweight: Herc Holdings was one. The equipment rental supplier is down 15% in the past 12 months. Last month, KeyBanc Capital Markets upgraded Herc to an overweight rating from sector weight. Analyst Ken Newman’s $200 price target implies potential upside of 27%. “We think HRI’s initial integration challenges following the close of the HEES deal are now behind it, and we think stronger synergy realization in FY26 could support upside to our estimates,” Newman wrote, referring to the acquisition of H & E Equipment Services. “Specifically, we think HRI has stabilized its salesforce following deal close, and we think the Company can now fully focus on achieving its ~$125M in targeted cost synergies by the end of year 2.” KeyBanc added that an additional catalyst comes from management’s recently complete IT systems integration with the acquired fleet, which should help improve efficiencies. Biotech company Vera Therapeutics , up 11% in the past year, was another name Wells Fargo touted. In October, Bank of America initiated research coverage of Vera with a buy rating, and a $48 price objective. “We view potential for upside in VERA shares coming from its lead drug, atacicept, launching into a multibillion-dollar market which we expect to beat consensus and quell concerns about competitive risk,” wrote analyst Dina Ramadane. Other stocks on Wells Fargo’s screen included energy company Matador Resources and industrial products manufacturer Ingersoll Rand .
