Wells Fargo Gets the Boot From Goldman Sachs' 'Conviction' Buy List
NEW YORK (TheStreet) -- Regions Financial(RF) has replaced Wells Fargo(MS) on the "conviction" buy list at Goldman Sachs, according to a report from Goldman's banking sector analysts published Monday.
Both banks have had a strong run this year, with Wells shares gaining 25% so far in 2012 versus a 71% rise for Regions ahead of Monday's open. By contrast, the SPDR KBW Bank ETF has gained 19%.
However, Goldman analysts see a better opportunity for further gains at Regions as it closes redundant branches and possibly looks to spin off its Midwestern banks.
"While both of these will take time to complete, if we were to assume
As for Wells, Goldman's analysts retained their "buy" rating, arguing the bank "remains uniquely positioned" to increase revenue through mortgage banking, cut expenses and return capital. However, they argue these strengths are "partially reflected in valuation" and they "believe there is better upside elsewhere." Wells trades at 9.3 times 2013 earnings estimates versus 8.3 times for "money center banks," according to Goldman's research.
-- Written by Dan Freed in New York.
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