UBS upgrades global financials to Overweight from Underweight on a healing global economy,...


UBS upgrades global financials to Overweight from Underweight on a healing global economy, rebuilt capital, and the sector's shift "from being a net issuer to a net distributor of cash." Furthermore, the U.S. banking sector (XLF) is taken to Overweight as balance sheet strength and attractive valuations play well with the housing market recovery to create compelling opportunities. European banks (EUFN) are lifted to Neutral "with a preference towards Nordic and U.K. banks." Financials respond in London with LLoyds Banking Group (LYG) +2.3%, Royal Bank of Scotland (RBS) +3.3%, and Barclays (BCS) up 0.5%.

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Comments (7)
  • Okatie Jack
    , contributor
    Comments (90) | Send Message
     
    Agreed, valuations are compelling.
    17 May 2013, 08:38 AM Reply Like
  • Akram's Razor
    , contributor
    Comments (988) | Send Message
     
    Is this a joke?

     

    They downgrade the whole sector last may, and they are now upgrading them after the avg global financial stock probably doubled.
    17 May 2013, 08:56 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (33999) | Send Message
     
    It's a tactical upgrade. It's using recommendations as weapons.
    17 May 2013, 10:04 AM Reply Like
  • randalld1
    , contributor
    Comments (3) | Send Message
     
    They wouldn't tell you to buy BAC at $ 7 but they have no trouble recommending "over-weights" in financials, many of which have almost doubled in the past 12 months. Sounds like a "top tick" call to me. Markets are all about the pendulum: from fear to greed to fear....
    17 May 2013, 05:10 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (33999) | Send Message
     
    They've been stuck on greed recently due to the FED.
    17 May 2013, 05:17 PM Reply Like
  • Saggio
    , contributor
    Comments (2) | Send Message
     
    The taper, when it materializes, means easy spread expansion and dramatically increased profitability.
    5 Jun 2013, 12:02 AM Reply Like
  • truebrit
    , contributor
    Comments (270) | Send Message
     
    This recommendation is not just for risky traders!

     

    Yes you could buy Bank of America 18 months ago for 5$ but it looked a risky punt. The point is that tail issues are mostly now in the rear view mirror and we've even had now regulatory constraints confirmed last week, so all know now at least roughly where they stand.

     

    Consider too the spike in Bond yields that has seen lenders move their rates up recently. At long last the banks are going to increase their income from their traditional source, the offer of home buying loans at a time when demand is booming.

     

    UBS's recommendation is wholly appropriate.US Financials are still below 2010 prices and they will lead the market higher over the next three years on ever increasing earnings and so there's a great deal of money to be made.
    6 Jul 2013, 06:16 PM Reply Like
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