Goldman Sachs Upgrades Wells Fargo To CL-Buy, Downgrades Citi To Neutral (WFC, C)

Goldman Sachs has upgraded Wells Fargo WFC to CL-Buy, from Neutral and downgraded Citi C to Neutral, from CL-Buy as WFC has had the most consistent core PPOP trends. Credit reached an inflection point in 4Q2010 WFC could surprise to the upside with both a dividend and buyback, and the recent sell-off given speculation around the CFO departure presents an attractive entry point. Moreover, 10-K signoff next week should ease investor fears over financial reporting issues. Goldman Sachs continues to like the Citigroup story over the medium to longer term given its exposure to emerging markets, continued book value growth, potential excess capital position and valuation relative to peers. However, given the market's focus on capital returns, Goldman believes Citigroup shares could struggle to find a near-term catalyst, which could lead to rotation into stocks with higher near-term capital deployment. While its capital ratios are amongst the strongest in the industry, Goldman's expectation is that capital deployment most likely will not occur until 2012. WFC closed Thursday at $31.44 C closed Thursday at $4.69