Shares of major U.S. banking companies led gains in the financial industry on Monday after analysts from Goldman Sachs and other firms upgraded the sector as a whole and said that earning power for the firms is improving.
In a report issued by Goldman Sachs, an analyst stated, “The market has failed to recognize the dramatic improvement in earnings power at the large banks versus the regional’s. We believe this difference in earnings power has not been fully reflected in share prices.”
Two of the major winners in the financial were Wells Fargo (NYSE: WFC) and Comerica (NYSE: CMA). Goldman Sachs upgraded Wells Fargo to a “buy” rating and Comerica to a “neutral” rating.
The Financial Select Sector SPDR , which tracks financial stock performance in the S&P 500, added over 1% today.
Goldman’s team of analysts raised Wells Fargo to a buy rating from neutral, stating that the bank’s capital position is improving rapidly and it will reap major rewards from the distressed takeover of Wachovia Corp. “Wells is the big winner this cycle on change in tangible assets per share, up 70% from the second quarter of 2007 to the second quarter of 2009. The reason is simple: Wells bought Wachovia at a depressed price,” the analysts said.
