When scandals break, losses and opportunities can both arise. It has been without argument that Wells Fargo & Co. (NYSE: WFC) has seen its image smeared and tainted after its account-opening scandal. We have seen some downgrades take place around the scandal as its tentacles are continuing to reach out and cause more pain and bad headlines for Wells Fargo. Now we have one analyst out actually upgrading the bank.

Robert W. Baird’s research team decided that close to a 10% drop to $45.43 prior to Monday’s call was too much for the mighty Wells Fargo shares. This call should be viewed as a controversial one because of how much it cost Wells Fargo, then considering that this is just a day ahead of management getting grilled in Congressional hearings.

Baird’s former Neutral rating was moved up to Outperform, and the firm assigned a $50.00 price target. Wells Fargo has a 52-week range of $44.50 to $56.34 and has a consensus analyst price target of $52.21.

Baird pointed out that shares of Wells Fargo have now been down in 6 consecutive trading sessions, and it was also down in 9 of September’s 11 trading days prior to Monday.

Wells Fargo’s market cap loss has been right at $25 billion after the scandal of creating unauthorized bank accounts in the cross selling that took place without actually selling. Baird pointed out that the damage has been similar to the “London Whale” scandal that cost J.P. Morgan Chase & Co. (NYSE: JPM) billions of dollars in recent years.

Baird pointed out that the J.P. Morgan scandal was a clear a balance sheet issue, but Wells Fargo should not be viewed the same. J.P. Morgan’s earnings hit was clear at that time, while Baird thinks that the Wells Fargo revenue loss will not even cost the bank one-cent against its earnings per share.

Scandals can be bad enough as is. Trying to get in the midst of them can be problematic at the onslaught. Still, uncertainty often creates opportunity — and Baird is viewing the recent weakness as an opportunity.

Investors should keep that the consensus analyst price target was already coming down ahead of Wells Fargo’s major SNAFU here. Its consensus analyst target was $54.80 in mid-June, followed by $52.93 in mid-July and $53.00 in mid-August.

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Deutsche Bank recently opined on Wells Fargo with a Buy rating and $59.00 price target after the news broke. It said in its September 14 call:

We can’t rule out additional legal and regulatory risk (State AGs of New York and California are investigating this issue per media reports this afternoon). That said, it’s worth noting that Wells Fargo’s 440 basis points of lag compare to a peak lag of 8% at BofA, 7% at M&T and 10% at J.P. Morgan over different periods (with most of the pain in the first week or first month). This suggests that the relative sell-off could be about 50% done, although each instance is unique. And while valuation matters less near term when such issues arise, they are relevant over time and Wells Fargo is about 10% cheaper versus peers than in the past. Wells Fargo now trades at a 5% P/E discount to large regional peers (vs. a 5% premium over the past 25 years) and a 10% premium to money center banks (versus a 20% premium historically).

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