Monday, May 24, 2010

"Why Goldman Slapped ‘Buy’ on Citi" (C)

A twofer from the Dow Jones blog empire.
First up MarketBeat:

As Josh Brown spotlighted over on the Reformed Broker, the upgrade that everyone seems to be talking about Monday is Goldman Sachs’ decision to slap a “buy” call on Citigroup.

It came as part of a broad-ranging analyst note that urged investors to keep betting on so-called universal banks. (Those are banks such as Citigroup, Bank of America and J.P. Morgan Chase that have exposure both to consumer lending and Wall Street capital markets businesses.) “There are two themes that keep us positive on universal banks – the turn in consumer credit, and prospects for a good capital markets quarter,” Goldman analysts wrote.

Here’s the short version of Goldman’s analysis on the consumer side: Unemployment seems to be improving slightly....MORE

From Deal Journal:

It Is Time to Buy Citigroup Shares. No, Seriously.

After months of insults, investigations and harsh regulation, Wall Street is feeling some love this morning.

Goldman Sachs analysts said in a research note that “fundamental trends are positive” for the financial industry, despite the 14% decline in the sector’s share prices in the past month.

Specifically, Goldman upgraded Citigroup to “buy” from “neutral” and kept J.P. Morgan Chase and Bank of America with “buy” ratings. A big reason for Goldman’s optimism about the banks is that credit quality has been improving these past few months. Data in mid-April showed a “sharp” improvement in delinquencies and charge-offs, driven by improving employment trends, according to Goldman’s analysis.

Another positive for the big banks: volatility is back. It may make ordinary investors queasy, but the traders at the big banks relish big price swings in the equities and debt.

Lastly, real-estate prices, both residential and commercial, are stabilizing, as mortgage rates remain low and commercial real-estate transactions pick up. That should help banks balance sheets and stem future write-downs....MORE


"Goldman Now Shorting Citi As It Upgrades Vikram's Insolvent Ward Of State To Buy, Puts Jefferies On Conviction Sell" (C; GS)

"Goldman Analysts Upgrade Citi to ‘Buy" (C; GS)