Goldman Upgrades WFC, Downgrades C

[Stocks-to-Watch]

Today, Goldman Sachs analyst Richard Ramsden upgraded Wells Fargo (WFC) to Buy from Neutral, increased his target price by $2 to $38, and added it to the Americas Conviction List.* He also downgraded Citigroup (C) to Neutral from Buy and removed it from the Conviction List.

Ramsden said that Wells Fargo upgrade was due to the company’s consistent core pre-provision operating profit (PPOP) trends, which he expects to continue through 2012, near term capital returns that should support earnings, and a possible dividend increase in the coming weeks. He also notes that credit reached an inflection point in the fourth quarter, with significant declines in NPA inflows, and that the stock has been unfairly punished for the departure of the CFO in early February, making a good entry point.

For Citi, he wrote that while he still likes the company longer-term for its emerging markets presence and strong capital ratios, the stock lacks near-term catalysts , given the market’s recent focus on capital returns. He thinks the company* is unlikely to deploy capital until 2012.

In recent trading, Wells Fargo was up 3.8%, while Citi was up 0.2%.



Original Article Source by Barrons.com