It's rare when one investment bank upgrades another financial institution, and that took place on Monday when Goldman Sachs (NYSE:GS) upgraded Wells Fargo & Co (NYSE: NYSE:WFC) making it the PreMarket Prep Stock of the Day.
Not A Bad Week: All things considered, Wells Fargo fared better than the S&P 500 index last week. While the index declined by 1.6%, the issue was down fractionally, falling from $40.41 to $40.22.
In addition, the issue made its low for the week on Monday ($39.34), which was substantially above its June low ($36.54).
That took place while the index appeared to make a definitive breach of its June low after making several attempts to do so earlier in the week.
Timely Upgrade: After a breach of Friday’s low by a considerable amount, the S&P 500 index futures recovered and were trading in the green ahead of the opening of the regular session Monday.
While investors were attempting to put last week's price action behind them, Goldman Sachs put Wells Fargo on everyone's bullish radar. Before the opening, Goldman Sachs analyst Richard Ramsden upgraded Wells Fargo from Neutral to Buy and raised the price target from $46 to $48.
PreMarket Prep's Take: When the issue was being covered on the show, it was trading higher by nearly $1 at the $41 area.
“I am long in my overnight portfolio but I'm going to be selling off the open,” said co-host Dennis Dick. “I cannot see any reason to be long the banks for the long term in this current market environment.”
The author of this article noted a void in price from Sept. 23, when the low from the previous day was $41.44 and the high the following day was $40.98. Of course, that was predicated on the indces following through on the premarket rally.
WFC Price Action: Following a higher open ($41.29 vs. $40.22), a wave of sellers came in, knocking the issue down to $40.64. Wells Fargo then resumed its mover higher, surpassing the aforementioned resistance. The stock ultimately gained 3.38% Monday, closing at $41.58.
If the rally continues, the next daily high does not come in until its Sept. 22 high of $42.51.
The discussion on the issue from Monday’s show can be found here:
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